27 May 2025 | INSIGHTS
In Part 1 of this article, we explored the formulation stage of Nepal’s budget process – delving into the constitutional provisions, legal frameworks, and structured procedures that guide the drafting of the national budget. Building upon that foundation, this second part turns to the critical next phases: the approval of the budget by the Legislature-Parliament and its implementation by the executive bodies.
The process begins with the tabling of the Bills in Parliament and continues through legislative deliberation and enactment, followed by the allocation and disbursement of resources. This is then carried forward through expenditure tracking, performance monitoring, and financial reporting. Key actors such as the Ministry of Finance, the Office of the Financial Comptroller General, and the Office of the Auditor General play vital roles in these stages. Additionally, digital systems like the Line Ministry Budget Information System (LMBIS) help promote accountability, transparency, and efficiency in budget execution.
CONTENTS
PRESENTATION OF BUDGET IN THE PARLIAMENT
PRESENTATION OF BUDGET IN THE PARLIAMENT
As mandated by the Constitution of Nepal, the finance minister presents the annual budget to a joint sitting of both houses of the federal parliament every year on the 15th of Jestha (Around end of May). During this presentation, the government typically introduces several key bills that form the legal foundation of the national budget. For the budget to be implemented, these bills must be approved by both houses of Parliament. In essence, the approval of these bills signifies the approval of the budget itself.
THE BILLS TO BE PRESENTED
Appropriation Bill (विनियोजन विधेयक)
The Appropriation Bill authorizes the government to spend the money allocated in the budget. It provides the legal authority for the disbursement of funds from the treasury as per the budget’s expenditure estimates.
This bill is vital because, without it, the government cannot legally spend money from the national treasury. It specifies how much money can be spent under each ministry and department. Once passed by Parliament, this bill ensures that the budgetary allocations are honored.
Finance Bill (आर्थिक विधेयक)
The Finance Bill is one of the most important bills presented alongside the national budget. It lays down the legal provisions to collect taxes, duties, and other revenue for the government. This bill typically includes:
Tax Rate Changes: Provisions for the rates of direct and indirect taxes, customs duties, and excise duties.
Tax Exemptions and Incentives: Changes to exemptions, deductions, or incentives to promote business and investment.
Customs and Import Policies: Regulations on imports, tariffs, and trade duties.
Revenue Administration: Provisions for tax collection and enforcement mechanisms.
The Finance Bill is necessary to make any changes or introduce new taxes or duties outlined in the annual budget.
Advance Bill (पेश्की खर्च विधेयक)
Advance Bill refers to a bill that authorizes the government to make advance payments or expenditures from the treasury before the formal approval of the entire budget. This bill is presented to ensure that the government can meet essential government obligations such as salary payments, ongoing project costs, or other urgent expenditures, while waiting for the final budget approval.
National Debt Raising Bill (राष्ट्र ऋण उठाउने विधेयक)
The National Debt Raising Bill is a crucial piece of legislation presented by the government. This bill is used to authorize the government to raise funds through borrowing, either domestically or internationally, to finance the fiscal deficit or support specific government expenditures. The bill establishes the legal framework within which the government can borrow and outlines the conditions under which such borrowing can occur.
Loan and Guarantee bill (ऋण तथा जमानत विधेयक)
This bill allows the government to borrow funds (either domestically or internationally) and provide guarantees to secure loans or credit facilities. It outlines the maximum borrowing limits for the government for the upcoming fiscal year and specifies conditions under which guarantees can be provided to state-owned enterprises (SOEs) or private entities.
The bill ensures that any borrowing or guarantees remain within the legal and fiscal frameworks set by the government.
THE APPROVAL PROCESS
As per Article 110 of the Constitution of Nepal, any Bill may be introduced in either House of the Federal Parliament. However, a Finance Related Bill (अर्थ विधेयक) must be introduced exclusively in the House of Representatives.
A Bill is considered a Finance Related Bill if it pertains to matters such as taxation, public fund management, government borrowing, financial obligations, or the regulation of federal revenues and expenditures.
Following the presentation of the annual budget and the introduction of related bills in the federal parliament, the budget approval process formally begins.
On 16 Jestha, a day after the budget is presented by the finance minister, the finance secretary presents the Budget Implementation Guidelines to support execution.
A bill passed by one House of the Federal Parliament is promptly forwarded to the other House. Once approved by both Houses, it is submitted to the President for certification.
A Finance Related Bill passed by the House of Representatives is sent to the National Assembly, which must, within 15 days either pass the bill, or return it to the House of Representatives with recommendations, if any.
If returned with recommendations, the House of Representatives considers them and may incorporate appropriate suggestions before submitting the bill to the President for certification.
If the National Assembly does not respond within 15 days, the House of Representatives may submit the bill directly to the President.
A Finance Related Bill submitted for certification must be authenticated by the Speaker of the House of Representatives.
Upon submission, the President shall certify the bill within 15 days, and both houses must be informed of the certification as soon as possible.
Once certified by the President, the bill attains legal status and becomes an Act.
Following presidential approval, the Ministry of Finance issues final Budget Implementation Guidelines by 1 Shrawan (Mid of July), enabling line ministries to receive funds and begin program implementation accordingly.
THE IMPLEMENTATION PROCESS
The budget implementation process in Nepal begins after the budget is approved by the Federal Parliament and certified by the President. The process ensures that allocated funds are used efficiently for government programs, infrastructure development, and public services.
The implementation phase is closely monitored by the Ministry of Finance (MoF), Office of the Financial Comptroller General (OFCG), and the Office of the Auditor General (OAG).
Budget Authorization and Appropriation
Upon approval of the Appropriation Bill and Advance Payment Bill, the budget entries made through the Line Ministry Budget Information System (LMBIS) are considered authorized for implementation.
The Treasury and Accounts Controller Offices release the approved budget to the respective implementing units, enabling expenditure in line with the Appropriation Act and annual work plans.
Appropriated funds are withdrawn from the Consolidated Fund through the single treasury account system or other designated methods, based on payment orders from the respective offices.
The head of the concerned office is responsible for acquiring funds, spending as per the law, maintaining records, reporting, facilitating audits, and resolving any irregularities.
Budget Execution
The designated financial/accounting officers and other responsible individuals prepare an action plan in line with Ministry of Finance directives to implement the budget.
The action plan includes an annual procurement plan, monthly cash flow, performance indicators, and a detailed implementation schedule.
Responsibility for executing the budget as per the Appropriation Act and approved plans lies with these designated officers and their subordinate units.
Appropriation and Source Transfer
If the budget under a particular sub-heading (economic code) is insufficient, the Ministry of Finance can reallocate funds between sub-headings under the same or different program indicators within limits of the Appropriation Act.
Within ministries, the respective secretary may reallocate amounts between sub-headings of the same program indicator provided the nature of the funding source is not changed, and no reallocation is made for items like salaries, allowances, utilities, or capital expenditure assigned to other headings.
The Ministry of Finance handles reallocations involving capital expenditure, financial management, and debt servicing, and may change the funding source or payment method, provided these remain within the Appropriation Act.
Monitoring and Evaluation
Ministers and secretaries conduct monthly and quarterly reviews of budget and program/project implementation under their jurisdiction.
Reviews assess both physical and financial progress, assessing alignment with planned output and timelines, procurement schedules, and cash flow forecasts.
These evaluations also include budget utilization by program and source, foreign aid mobilization, and revenue collection. A quarterly report is submitted to the Ministry of Finance.
Each ministry prepares and submits a mid-year and annual evaluation report, based on inputs from subordinate offices to the Ministry of Finance at least 15 days before the government’s consolidated report is released.
Reporting, Audit, and Accountability
The Office of the Financial Comptroller General (OFCG) sets guidelines for financial reporting, ensuring compliance with public sector accounting standards.
Accounting officers consolidate financial details from subordinate units, maintaining a central ledger and submitting it to OFCG. Ministries also maintain subsidiary accounts of assets, liabilities, and claims.
Internal audits are conducted every four months by the OFCG or Treasury Comptroller Offices to evaluate compliance, efficiency, and effectiveness in financial operations.
Internal audit reports are submitted within one month of completion to both the concerned office and appropriate oversight authorities.
The OFCG prepares a consolidated annual internal audit report, submitting it to the finance minister by the end of Kartik each fiscal year.
Every office submits its final accounts for auditing by the Office of the Auditor General, which considers internal audit findings during its review.
CONCLUSION
Nepal’s budget approval and implementation process is well-anchored in constitutional and legal mandates, ensuring a structured progression from formulation to execution. However, the effectiveness of this process depends significantly on timely legislative action, robust institutional coordination, and strong fiscal oversight.
To enhance transparency, accountability, and budget discipline, the government must continue to invest in capacity-building across all implementing agencies. Leveraging digital platforms such as LMBIS and strengthening internal audit mechanisms are equally essential to ensuring that public funds are utilized efficiently and effectively. Only through such integrated efforts can the budget serve as a reliable tool for national development, service delivery, and the promotion of good governance.
KEY CONTACTS
Drop us a mail at enquiry@reliancecs.co for more information on our work in this arena and your requests.
