Kathmandu, May 27: Despite a clear legal provision that prohibits budget allocation to projects not listed in Nepal’s National Project Bank (NPB), repeated violations continue to plague the budgeting process. Rule 26(5) of the Financial Procedures and Fiscal Responsibility Regulations, 2020, explicitly states that budgets cannot be allocated to projects not included in the NPB. However, even after five years, the rule remains largely unimplemented, and the Project Bank has failed to function effectively.
Each year, political influence and bureaucratic negligence have turned what was supposed to be a tool for budget discipline into a channel for arbitrary allocations. Oversight bodies have persistently flagged these issues and recommended reforms, but implementation remains elusive.
Originally envisioned as a filter to prevent funding of unprepared or politically motivated projects, the Project Bank has instead become a gateway for budget violations. Ministries continue to insert projects into the budget without prior registration in the Bank, often bypassing legal timelines and criteria. Some projects are inserted with bias or intent to benefit specific interest groups, while others are removed without justification.
Although the law mandates that only projects listed in the NPB receive budget allocations, this requirement remains unmet. Officials from the Ministry of Finance and the National Planning Commission claim the system is still being updated and that coordination is ongoing. “We are working on it. Once the budget is out, we’ll know how much compliance we achieved,” said Ministry spokesperson Shyam Prasad Bhandari.
According to the guidelines-2024 on the management of the Project Bank, all new projects for the upcoming fiscal year 2082/83 should have been registered by mid-April (Fagun-end) or at the latest by mid-March (Chaitra-end). However, ministries were still inputting projects as late as two days before budget announcement, violating their own standards.
Former Vice-Chair of the Planning Commission Dr. Min Bahadur Shrestha blames political pressure and bureaucratic indifference for the failure. “Politicians ignore laws and budget discipline when preparing budgets. Ministries prioritize projects listed by political leaders rather than those with proper documentation,” he said.
Former Secretary Madhu Kumar Marasini echoed this, pointing to a lack of training and understanding among government staff. “There was confusion about which projects to include. When we tried to enforce the rule, many existing projects were added en masse, often without proper quality checks,” he said.
Recent years have seen a suspicious surge in the number of projects entered into the Bank — many without feasibility studies or proper documentation. In FY 2020/21, only 6,644 projects were registered, but that number jumped to over 11,000 in FY 2023/24. Notably, the Urban Development Ministry added 7,377 projects, Infrastructure and Transport added 5,294, Drinking Water added 2,859, and Health and Population ministry added 615 projects.
Criticism of Auditor General
The Office of the Auditor General (OAG), supreme auditing body of Nepal, has consistently raised concerns in its last five annual reports. The 62nd report notes that budget allocations were made to projects not in the NPB and to those below the minimum cost threshold (Rs 30 million for federal, Rs 10 million for provinces).
Example: Of the 3,990 projects budgeted for the Ministry of Infrastructure, 805 were not registered in the Bank. Similarly, 4,962 Urban Development Ministry projects were not listed yet received funding.
Facing budgetary constraints, the government plans to slash 10,000 to 11,000 projects from the Bank for FY 2082/83. But there’s no study on the impact of these cuts or on which types of projects should be removed. The Planning Commission claims cuts are based on guidelines, but the process lacks transparency and accountability.
At a recent pre-budget event, Finance Minister Bishnu Prasad Paudel admitted to weak allocation efficiency and vowed to reverse the trend. “The budget system is flawed. We’re not adding more problems—we’re trying to fix what exists,” he said, promising a realistic and implementable budget for the upcoming fiscal year.
The 2024 guidelines require detailed objectives, timelines, costs, and funding sources for each project to be registered in the Bank. Only infrastructure projects with costs over Rs 30 million are eligible. The Bank must also integrate with other national systems like the Medium-Term Expenditure Framework, e-Procurement system, and online monitoring tools.
To improve coordination, the Planning Commission is working on a unified Project Bank that includes federal, provincial, and local levels.
Despite the legal framework and technological tools in place, Nepal’s Project Bank continues to fall short of its promise due to political interference, weak institutional capacity, and poor enforcement. The challenge now lies in transforming it from a symbolic database into a meaningful tool for fiscal discipline and project efficiency. #nepal #budget #project #bank
