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2009 Assessment

Nepal: Integrity Indicators Scorecard

Nepal: Integrity Scorecard Report > Sub-Category: Budget Processes
Indicators		Score
40	Can the legislature provide input to the national budget?	83
41	Can citizens access the national budgetary process?	50
42	In law, is there a separate legislative committee which provides oversight of public funds?	100
43	Is the legislative committee overseeing the expenditure of public funds effective?	58

Indicator and sub-Indicator Details

Can the legislature provide input to the national budget?

40a: In law, the legislature can amend the budget.

Score:

YES

Comments: The Ministry of Finance, on behalf of the government, submits the budget estimates to the Parliament every year. Different organizations, including the National Planning Commission, line ministries and their department and project units are involved in the budgetary process. The legislative wing of the national legislature, which comprises the opposition and the treasury benches, can suggest adding or removing items or altering the amount allocated to certain sectors during a general debate session. The rules formulated by the Legislative-Parliament provide comprehensive provisions regarding procedures.

The government generally ensures safe passage of the budget, as it normally enjoys the majority in the Parliament. This year's budget, however, has not been passed due to the Maoists' obstruction in the Parliament over the issue of so called "civilian supremacy" and the President's decree of reinstatement of the then-Chief of Army Staff.

References: *Interim Constitution of Nepal 2007 [Article 93]

*Legislative-Parliament Rules 2007 [Chapters 19 and 20]

The National Planning Commission Portal, [ LINK ]

40b: In practice, significant public expenditures require legislative approval.

Score:

100

$Scoring Criteria :: 100 Score Criteria: All significant government expenditures (defined as any project costing more than 1% of the total national budget), must be approved by the legislature. This includes defense and secret programs, which may be debated in closed hearings. <p>50 Score Criteria: Most significant government expenditures (as defined) are approved by the legislature, but some exceptions to this rule exist. This may include defense programs, an executive\'s personal budget, or other expenses. <p>0 Score Criteria: The legislature does not have the power to approve or disapprove large portions of the government budget, or the legislature does not exercise this power in a meaningful way.$

Comments: No public expenditures can be made without legislative approval. Therefore, the government may face a huge problem this year as no parliamentary session has been allowed by the Maoists during the last three months.

Post-facto approval is also possible. The government, however, has to regularize expenditures made from the state coffers. Government spending is scrutinized by the Comptroller and Auditor General of Nepal.

References: *Interim Constitution of Nepal 2007

*Other prevalent Nepalese laws.

The Law Commission of Nepal has listed a total of 168 Statutes/Acts (51 of them translated into English and 117 in Nepali) on its website, [ LINK ]

*Office of the Auditor General of Nepal Portal; [ LINK ]

*Financial Comptroller General Office Portal; [ LINK ]

40c: In practice, the legislature has sufficient capacity to monitor the budget process and provide input or changes.

Score:

100

Comments: All the 601 Minisres of Parliament (who are elected and nominated from different political parties to ensure all types of representation i.e. caste, gender, ethnicity etc.) may not have the capacity to monitor the budget process. Yet, most lawmakers are qualified enough to provide input.

In addition, the finance committee, where members from different political parties make representations, has the right to question the government over the process, and provide necessary input. In this way, the opposition may suggest certain changes during the debate or in the parliamentary committee that discusses the proposed budget before it is passed or finalized. However, these opposition proposals may be rather insignificant, since the bill is endorsed by the majority.

References: The Constituent Assembly Portal, [ LINK ]

Peer Review Comments: Though there is a law, in practice, the budget is almost never changed because it is the government that has the majority in Parliament. The attempts by opposition parties to make amendments are mostly quashed.

Peer Review Comments: The arguments are good, but I think the score should be 75.

Can citizens access the national budgetary process?

41a: In practice, the national budgetary process is conducted in a transparent manner in the debating stage (i.e. before final approval).

Score:

100

Comments: An elaborate procedure has been prescribed by the law. The budget process is transparent. The practice, however, is carried out only because the law requires it. The process has become only a simple ritual. In addition, there are problems with time constraints. This type of budget making process, therefore, does not necessarily ensure the public's participation at large.

References: Laws relating to budgetary process.

The Ministry of Finance Portal, [ LINK ]

41b: In practice, citizens provide input at budget hearings.

Score:

100

Comments: The public cannot participate in budget hearings in Parliament. Only elected and nominated representatives may provide input. There is no mechanism available through which citizens can contribute to the debate. Citizens usually react to the budget afterward. However, in the recent years, the Nepalese media and civil society organizations have started organizing pre-budget debates involving experts and citizens alike. Citizens get the opportunity to express their views in these indirect forums only.

References: Legislative-Parliament Rules 2007

Peer Review Comments: I think this is not applicable in Nepal where the major decisions are made by representatives of the people. Grass-root participation at budget hearings is something we haven't practiced.

41c: In practice, citizens can access itemized budget allocations.

Score:

100

Comments: A government booklet called "Rato Kitaab" contains information relating to an itemized budget. Itemized budget allocations can be accessed only after the budget is presented in Parliament. Nevertheless, the Nepalese media, by and large, have started to keep the public informed on itemized budget allocations in both print and television debates.

References: Interview with Mr. Mani Ram Neupane, a government official affiliated to the Inland Revenue Office, Kathmandu

The Ministry of Finance Portal, [ LINK ]

Peer Review Comments: All budget allocations, including headings and expenditure amounts, are put online on the website of the Ministry of Finance. For those who have Internet access, they can easily see the allocations, but it may be difficult to get information for those not having the Internet.

Peer Review Comments: If the itemized budget allocations are accessible to the citizens, why don't we give a score of 75? The budget is a little more transparent than other sectors.

In law, is there a separate legislative committee which provides oversight of public funds?

42: In law, is there a separate legislative committee which provides oversight of public funds?

Score:

YES

Comments: The Public Account Committee (PAC), a special committee in the parliament, is the oversight agency. Apart from the PAC, the Finance Committee of Parliament also provides oversight of public funds.

References: *Interim Constitution of Nepal 2007 (Articles 57 and 58)

*Legislative-Parliament Rules 2007 (Chapter 26, Clauses 181 and 187)

Is the legislative committee overseeing the expenditure of public funds effective?

43a: In practice, department heads regularly submit reports to this committee.

Score:

100

Comments: The Public Account Committee scrutinizes the reports submitted periodically by the government departments. This report is submitted by the constitutional body (i.e., the Auditor General) and also goes to this committee for inspection. In addition, oral testimony is sometimes sought from the government departments. However, the government often ignores the committee's directives and seldom implements suggested reform measures.

References: Legislative-Parliament Rules

Interview with Mr. Tulasi Bahadur Karki, non-governmental organization representative.

43b: In practice, the committee acts in a non-partisan manner with members of opposition parties serving on the committee in an equitable fashion.

Score:

100

$Scoring Criteria :: 100 Score Criteria: The committee is comprised of legislators from both the ruling party (or parties) and opposition parties in a roughly equitable distribution. All members of the committee -- including opposition party members -- are able to fully participate in the activities of the committee and influence the committee\'s work to roughly the same extent as any other member of the committee. <p>50 Score Criteria: The committee is comprised of legislators from both the ruling party (or parties) and opposition parties although the ruling party has a disproportionate share of committee seats. The chairperson of the committee may be overly influential and curb other members\' ability to shape the committee's activities. <p>0 Score Criteria: The committee is dominated by legislators of the ruling party and/or the committee chairperson. Opposition legislators serving on the committee have in practice no way to influence the work of the committee.$

Comments: In the Nepalese Parliament, a member from the opposition party generally heads the Public Account Committee while the other members come from other major political parties, including the ruling party.

References: Parliamentary practice in Nepal

Peer Review Comments: The members are mostly loyal to their political parties and this is in evidence when there are decisions being made in major cases. They generally act in line with the party's directives.

43c: In practice, when necessary, this committee initiates independent investigations into financial irregularities.

Score:

100

Comments: The Public Account Committee conducts independent investigations of objections that are raised about audits. It is also required to submit its report. However, political parties do not cooperate with the committee in many cases. Its functioning is, therefore, largely ineffective. Lack of political will and human-resource constraints limit its effectiveness.

References: Interview with Mr. B.P. Gautam, Advocate

Peer Review Comments: I agree withe the comments, but I want to change the score because there are a number of incidents where the committee initiated investigations independently and issued orders to the government.