Nepal Government Amends Financial Procedures to Expedite Development Payments

Kathmandu. The government has amended financial procedures to end the long-standing delays in payments for development and construction projects. The amendment aims to make budget implementation more effective.

The government has issued the 'Financial Procedures and Financial Accountability (Third Amendment) Regulations, 2083' in the Nepal Gazette, delegating the authority to reallocate capital funds to lower-level officials. Finance Secretary Dr. Ghanshyam Upadhyaya stated that the regulations came into immediate effect upon their publication in the Nepal Gazette on Baisakh 7.

The new regulations amend Rule 131 of the original 2077 regulations by adding sub-rules (1a) and (1b).

Under the new provision, the Ministry of Finance can now delegate the authority to reallocate capital funds, as per Section 20, Sub-section (3) of the Act, to the 'Accounting Officer' (Secretary of the concerned ministry or head of the agency) of any entity.

Previously, even minor reallocations required approval from the Ministry of Finance, leading to months of delays. Consequently, contractors were unable to receive timely payments despite completing their work. With this delegation of authority, the concerned ministries or agencies can now proceed with reallocation and payment processes as needed.

However, this authority does not permit arbitrary decisions. Sub-rule (1b) explicitly states: 'The accountability for the exercise of the delegated authority shall rest with the concerned Accounting Officer.' The official will be fully responsible for the decision and justification of the reallocation.

This government move is expected to facilitate construction contractors. The policy reform is anticipated to increase capital expenditure (development budget) and boost the sluggish economy by improving market liquidity (cash flow).