Budget Planning in Nepal Budgeting principles prerequisites for budgeting Budgeting approaches Steps

1. BUDGET PLANNING
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Heera KC
Lecturer, Purbanchal University, Nepal
MSc. Nursing (Midwifery)

2. HISTORY of budgeting in Nepal
 The first annual budget was presented in 1951.
 The budget covered the period March 1951-
February 1952.
 The budget amount was Rs. 5,25,29,000.
 Finance minister Subarna Shamsher who was one of
the members of the council of ministers led by the
then Prime Minister Matrika Prasad Koirala.
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3. BUDGET PLANNING
 Budget planning is the process by which a
company or individuals evaluate their earnings
and expenses and project their monetary intakes
and outtakes for the future.
 Goal is to lay out all necessary components and
brainstorm future goals.
 Budget planning may be completed in one
meeting or it may take weeks of evaluating
available data to finalize.11/22/2017 3

4. Budgeting
 It is the process of creating a plan to spend money.
This spending plan is called a budget.
 Budgeting is the process of designing, implementing
and operating budgets.
 It is the managerial process of budget planning and
preparation, budgetary control and the related
procedures.
 Budgeting is the highest level of accounting in terms
of future which indicates a definite course of action
and not merely reporting.
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5. 10 Principles of Budgeting
 Manage budgets within clear, credible and predictable
limits for fiscal policy.
 Closely align budgets with the medium-term strategic
priorities of government.
 Design the capital budgeting framework in order to meet
national development needs in a cost-effective and
coherent manner.
 Ensure that budget documents and data are open,
transparent and accessible.
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6.  Provide for an inclusive, participative and realistic debate
on budgetary choices.
 Present a comprehensive, accurate and reliable account of
the public finances.
 Actively plan, manage and monitor budget execution.
 Ensure that performance, evaluation and value for money
are integral to the budget process.
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7.  Identify, assess and manage prudently longer-term
sustainability and other fiscal risks.
 Promote the integrity and quality of budgetary forecasts,
fiscal plans and budgetary implementation through
rigorous quality assurance including independent audit.
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8. BUDGETARY
PROCESS
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9. DEFINITION
 Budgetary process is a systematic activity that
develop a plan for expenditure of a usually fixed
resource, such as money or time, during a given
period to achieve a desired result.
 Budgetary process is sequential activity where
various steps are followed.
 The budget process consists of activities that
encompass the development, implementation and
evaluation of a plan for the provision of services and
capital assets.
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10. A budget process
refers to the process by which governments create
and approve a budget, which are as follows:
 The Financial Service Department prepares
worksheets to assist the department head in
preparation of department budget estimates .
 The Administrator calls a meeting of managers and
they present and discuss plans for the following
year’s projected level of activity.
 The managers can work with the Financial Services,
or work alone to prepare an estimate for the
departments coming year.
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11.  The completed budgets are presented by the
managers to their Executive Officers for review and
approval.
 Justification of the budget request may be required
in writing. In most cases, the manager talks with
their administrative officers about budget
requirements.
 Adjustments to the budget submission may be
required as a result of this phase in the process.
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12. PREREQUITESITE
OF
BUDGETARY PROCESS
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13. Pre-
requisites
Goal
Individual
Knowledge Organizational
structure
Data
Budget
period
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14. Cont...
According to FURST,1981
 The goals and objectives must be known.
 There must be an organizational structure to support the
plan.
 Each individual who will have responsibility for the
budget must be involved in its development if
commitment to the goals and budget is required.
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15. Cont...
 The manager should have the knowledge about
budget process. They need to have the orientation
regarding format or process utilized in the specific
institution.
 Data must be available to facilitate forecasting or
projecting activity.
 The budget period must be clearly defined.
 The accounting system must be clear.
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16. CONT...
 Feedback must be available to departmental managers to
measure and guide their performance.
 Assumptions related to budget must be known and utilized
throughout the process.
 Prioritizing the goals of organization according to
importance and affordable within a specific period of time
before the capital or program budget is prepared.
 Prepare statistical budget to develop the operating
budget, so that capital budget can be prepared.
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17. Approaches to Budgetary Process
1. Top-down budgeting
2. Bottom-up budgeting
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18. Top-down budgeting
 Top-Down Budgeting is the term given to a budgeting
process based on estimating the cost of higher level
tasks first and using these estimates to constrain the
estimates for lower level tasks (Anon, 2010)
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19. Advantages
 Takes less time
 Promotes upper-level commitment
 Can address the objectives of the organization
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20. Disadvantages
 Might be inaccurate due to limited knowledge, which in
turn will result in insufficient budget for the department
and cause potential for under performance .
 Lower morale of subordinates that they are not involved
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21. Bottom-up budgeting (Participated budgeting)
 Bottom-up budgeting begins with identifying all the
constituent tasks that are involved in implementing a
project and working out the resources and funding
required by each.
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22. Advantages
 Clear and detailed information
 Get involved all employees
 Higher level of morale and motivation
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23. STEPS IN BUDGETARY PROCESS
Budget
estimate
preparation
Screening
Budget
approval and
sanction
Budget
allocation
Budget receipt/
Implementation
Budget
monitoring
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24. 1. Preparation/Formulation/Estimate
Process of Budget
 National planning commission is responsible to set
up the long term plans and programs of annual
development budget of the government.
 Nepal Central Bank and Ministry of Finance
estimate the revenue and expenditure for next year.
 Macroeconomic policy will be set up by organizing
joint meeting between MoF, NPC and Central Bank.
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25. Cont...
 The budget documents contains data concerning
actual budget of previous years, revised estimates
of current years and estimated budget of coming
fiscal year.
 The district level office has practice Bottom up
planning in different districts and submits to the
MoHP through various departments.
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26. 2. Screening
 Ministry of finance makes an analysis of the financial
position of resources (Internal revenues and foreign
assistance) and estimates expenditure.
 If the estimated expenditures are more than the
receipts, MoF requests the ministers, departments and
constitutional bodies for final budget discussion.
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27. Cont...
 There will be joint meeting between NPC, MoF and
concerned ministry/constitutional bodies in NPC.
 The program manager should present logically and
then after screening the budget for next years.
 The budget will be finalized by bargaining,
negotiation and compromising.
 Priorities the budget on the basis of department of the
program.
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28. Cont...
2) Budget Approval
Extra mural approval system
Intra Mural Approval
System
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29. cont…
Intra mural approval system:
 The intra mural approval system, i.e. within the
organization approval system
 Two steps: firstly by the head of hospital and then by
the head of institute.
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30. cont…
Extra mural approval system:
 The approving authority is the same for all government
funded hospitals i.e. through joint Secretary, Health
Secretary, and Health Minister.
 It is then presented in the Parliament and final
approval is signed by Prime Minister who is the
chairman of Planning Commission.
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31. 3. Sanction: Permission given by authorities to do
something.
 By our constitution there will be joint sitting of
parliaments an annual estimate including following:
 An estimate of revenue
 The money required to meet the charges on the
consolidated fund.
 The money required to meet the expenditure to be
provided for an appropriation act
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32. Cont...
 The MoF presets the estimates of revenue and
expenditure of Nepal government for the next fiscal
years before joint sitting of parliament in the last week
of Ashad of every year.
 Budget is discussed, item wise and sector wise by the
members of parliament.
 After discussion, the budgets are passed by the
parliaments and sent to the President for his/her assent.
 Then after it would be eligible for implementation.
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33. Cont...
 The fiscal year starts from 1st Shrawan and ends at last
day of Ashad. MoF prepares the estimated income and
expenditure budget book (Red Book) for the coming
year.
 Finance minister submit the budget in the parliament
for its approval.
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34. 4) Budget allocation
 Final approval for the budget is voted ,then allocated
to organizations.
 Finance is sanctioned in installment based on hospital
funding, management policy, performance, actual
expenditure of last year and future plans
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35. 5. Receipt of Budget or Implementation of
Budget
 According to our constitution, the budget cannot be
implemented without the approval of the parliament.
 The following process had been adopted for the
implementation of budget
 Provide authorized paper
 By checking out the authorized paper
 Approving the core and non-core program
 Process for budget release
 Guarantee the resources for priority 1 or core project.
 Release budget based on performance.
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36. 6) Budget monitoring
 Budget monitoring is usually made by the budget
reports.
 Budget monitoring committee comprising of
representatives of each department, financial advisor
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37. Agencies Involved in Budgetary Process
in Nepal
 National Planning Commission
 Ministry of Health and Population
 Line Ministers
 DoHS
 Ministry of Economics
 Health Economists organizations.
 Health Specialists team.
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38. Budget Formulation Practice in Nepal
 Present budget formulation approach:
(Before 1991 mostly top down approach, after
democracy both top down and bottom up)
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39. 11/22/2017 39
Ministry
of
Finance
(MOF)
National Planning
Commission
(NPC)
Line
Ministries
Departmen
ts
District
offices
Top down approach (for central government):

40. - Bottom up approach (for local government)
NGOs
Ward offices/
Consumer
committee/ Political
parties
Rural M./
Municipal
ity
District
Council
District
developme
nt
Committe
e
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41. (Prime
Minister)
NPC
(Call circular with
guidelines + ceiling,
discussion)
Line Ministries
(Sectoral budget)
Cabinet
(For policy
approval)
Departments
District
Level offices
MOF
(Resource
committee, budget
committee, budget
Discussion, finalize
budget,)
Policy
directives
– plan
MOF
Legislative
(Parliament) Finance
Minister
(Budget
Approval)
Local Government
(Policy guidelines –NPC,
Formulate and approved,
informed to NPC and
Line Ministries
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42. Budgetary Practice in Nepal
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Month Agency Activities
October /
November
NPC +
MOF,
Cabinet,
Line
ministries
Macro economic frame work is prepared
(Budget deficit, growth)
Development plan and programs decision
for next year budget
Project priorities are defined
Revenue mobilization
periodic plan and goals
November NPC,
Cabinet
Ceiling are determined by sectors; cabinet
approves overall plan
December NPC Budget circular released with budget
guidelines, sector wise ceilings and budget
request format

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March
last week
Line Ministries Submit budget to NPC and MOF
April/
May
NPC, MOF,
Line ministries
Budget Discussion:
NPC- objectives, plan, programs,
strategies, target, indicators on
development budget .
MOF- line item budget allocation
for recurrent and capital expenditure.
(Budget request are reviewed and
negotiated between MOF, NPC and
line ministries reached the consensus;
and NPC gives policy approval for
ministerial budget and MOF finalize
funding part).

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June MOF Finalize budget and submit to
cabinet for approval
July MOF Finance minister present budget
proposal in the parliament for
approval
September Parliament Approves budget

45. BUDGET PLANNING AT ALL
GOVERNMENTS- BUDGET DATES
Government
of Nepal-
29th May
Provincial
Government-
14th June
Local
Government
30th June
17th July
Budget
execution

46.  Health Budget : 2076: 4.67%
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47. Questions???
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48. REFERENCES
 Basavanthapa BT, Nursing administration, jaypee
brothers publications; 2nd edition;2009;page number-
306-317.
 Singh Dr Indira, Leading and Managing in Health, fifth
edition,Hisi offset Printers Pvt. Ltd,kathmandu, pg. no.
380-382
 Meheta,R and Pokharel T. Leadership and
Management, 3rd edition,2012, Makalu publication
House , Kathmandu pg.no.346-359
 www.unsouthal.edu/osp/documents/sample research
budg.doc.
 www.doculink.org/downloads/doc sample.
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49. Cont...
 Rana Muna, Bista Archana, Leadership
and Management in Nursing, 1st edition,
Medhavi Publication, kathmandu, pg.no.
160-164
 Vati jogindra, Principle and practise of
Nursing Management and
Administration for BSc and MSc
Nursing,first edition,2013,Jaypee
Brothers Medical Publishers(p) Ltd,New
Delhi, India, Pg.no.580-593
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