Nepal's Budget Process Highlights Political Instability and Urgent Need for Reform

Nepal's fiscal year 2081/82 budget process has drawn significant attention, showcasing the nation's ongoing political instability. The principles and priorities were presented by Finance Minister Prakash Sharan Mahat, the budget was tabled by Barshaman Pun, and its implementation is now under Finance Minister Bishnu Poudel. This unprecedented shift of finance ministers across three stages, each from different political parties, underscores the challenges of continuity in governance.

The situation points to deeper systemic issues within Nepal's political and fiscal framework. Despite commitments from major political parties like UML and Nepali Congress to achieve political stability through constitutional amendments, progress has been sluggish. This lack of reform has implications for the efficiency and coherence of the budget process.

According to Nepal's constitution, the finance minister must present the budget by Jestha 15, following meticulous preparations involving the National Planning Commission (NPC) and ministries. However, the NPC has often failed to enforce adherence to the medium-term expenditure framework (MTEF), a critical tool introduced to align periodic plans with annual programs.

Budget execution also remains a concern. By mid-Poush, only 35.89% of the budget had been utilized, with capital expenditure at a dismal 16.16%. This inefficiency affects economic growth and employment. Critics argue that a "bottom-to-top" approach, where local governments prioritize projects, must replace the existing "top-to-bottom" planning system to ensure better alignment across all levels of government.

Nepal's budgeting process calls for urgent reforms, emphasizing better coordination and effective implementation to achieve fiscal discipline and sustainable growth.