MoF wants project preparedness before funding

Kathmandu, Mar. 22: The Ministry of Finance (MoF) is lobbying not to fund any development project without making complete preparations.

"Projects with weak preparation, and without alignment and cost estimates will become sick in the future, so the ministry is planning to drop such projects in order to create fiscal resources for other projects," Hari Saran Pudasaini, Chief of Budget and Programme Division at the MoF said at an interaction on 'Public Finance Management'.

He also suggested that the number of national projects should be less than 50 as the country is yet to develop capacity to handle more projects.

Pudasaini said that the budget system must not come under political pressure as the country already had many projects initiated in the past without proper identification of financing and preparedness. "They are like illegal off-springs of the government and we are facing hard times managing them," he said.

Secretary of the National Natural Resources and Fiscal Commission (NNRFC) Baikuntha Aryal pointed towards the need of capacity development of the local governments across the country.

A coordinated approach by the National Planning Commission, MoF, NNRFC and the Ministry of Federal Affairs and General Administration is needed for the capacity development of the local units, he said.

“As the country is implementing the fiscal federalism, there are challenges related mainly to institutional capacity, fiscal capacity and technical capacity for the effective public finance management,” said Aryal.  “For the allocation efficiency of resources, the capacity of finance ministry alone is not adequate. All spending agencies should have similar capacity,” he added.

Former Financial Comptroller General Suresh Pradhan said that lack of proper accounting, recording and reporting system at local level could lead to financial indiscipline.  

Sushil Pandey, Coordinator of the Public Expenditure and Financial Accountability (PEFA) secretariat, said that public finance management in recent years was getting linked with the macro-economy of the country, rather than limiting it to budget cycle.

“The public finance or spending should be aimed at increasing social equity, maintaining financial balance and ensuring justifiable results,” said Pandey.

Economist Dr. Achyut Wagle said that lack of strong political will had given way to the corruption in public procurement. "The collusion of political leadership and bureaucracy was the main reason behind the poor procurement management," he said.

He said that the federal structure has created additional challenges in the public finance management (PFM) as the newly created local bodies lack the knowledge and expertise in budgeting and implementation of programmes.

Similarly, former secretary Shankar Adhikari suggested creating a dedicated procurement unit in each development ministry and agency and equipping them with sound technical human resources.

Likewise, IT Director of the Public Procurement Monitoring Office Manish Bhattarai said that the electronic government procurement (e-GP) would be expanded to all levels of government.

Franck Bessette, Lead Financial Management Specialist at the World Bank Office in Nepal, said that the public finance management remained a core part of democracy. He said that having right and experienced people able to prepare, discuss and implement the budget and do the procurement works at the local level in the new federal system was a challenge.

The event was jointly organised by the Society of Economic Journalists (SEJON) and the PEFA secretariat.

Published in The Rising Nepal daily on 23 March 2019.