Provision for Budget Transfer and Source Variation

25% of budget can now be transferred by Secretary of concerned ministry, concerns over misuse of new rules increase

KATHMANDU: Rules are being amended so that the secretaries of the concerned ministries can spend the budget by conducting source variation and budget transfer. This right is being given to the Secretary of the thematic Ministry by amending the Financial Procedure and Financial Accountability Rules 2077 and Operational Guidelines 2077. 

The secretaries of the concerned ministries can now transfer 25% of the budget. However, the budget title cannot be changed. 

Spokesperson of the Ministry of Finance Mahesh Acharya said that the secretaries of the concerned ministries can transfer up to 25% without changing the title.

He said “Any ministry will be able to remit 25% of the total allocated budget. However, the budget title cannot be changed. The money to build the roads should be used to do the same, but the location can be changed.” 

Earlier, Article 32 of the Financial Procedure and Financial Accountability Rules gave the secretaries of the thematic ministries the right to transfer the budget but for that, the approval of the Ministry of Finance was mandatory. 

The Ministry of Finance is confident that this will make things easier as earlier, there was the hassle of this procedure having to reach the Ministry of Finance for approval and that the work of the projects would be affected due to lack of resources due to procedural hurdles. The Ministry of Finance has stated that the arrangement has been made to shorten the administrative process and eliminate delays in work. 

The Ministry of Finance says that the project implementation and budget expenditure will be effective due to this policy taken by the Ministry of Finance for source variation and budget transfer. 

The authorized officer of the government body of any ministry will request the secretary of the concerned ministry for budget transfer. After that, if the secretary of the ministry deems it appropriate, the money can be transferred to the relevant budget title and placed in the ministry-wise budget information system ‘LMBIS’, according to the Ministry of Finance. 

Although money can be transferred within the same title, approval from the Ministry of Finance will be required for different titles.

Concerns over misuse of resources 

Experts say that even if the government’s move is taken positively, there is a risk of misuse of resources. They have expressed concern that the decision of the Ministry of Finance may be misused when this authority is handed over to the concerned ministries and secretaries.  

Economist Dilliraj Khanal says that this should be viewed from both angles. He is of the view that the steps taken by the Ministry of Finance to make the budget and project implementation effective should be taken positively. 

He said “The move should be taken in a positive light as going to the finance ministry and adopting the necessary procedures for the budget transfer will create problems in budget implementation.” 

However, Khanal stressed the need to provide strict conditions and laws to prevent misuse of resources in the interest of the concerned ministry. Dr Khanal explained, “The ministry’s proposal should impose certain safeguards or conditions to ensure that resources are not misused. It remains to be seen how they will be doing this.” 

He stressed that this facility should be allowed to be used only if the justification and grounds of not spending in one area and spending in another one instead can be confirmed and verified. He is of the opinion that the legal process should be ensured keeping in view the necessary rules and regulations while transferring budget. 

Earlier, the ministry could not transfer resources on its own. Although this has prevented misuse of resources to some extent, this decision has changed the situation.  

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