Enhancing Fiscal Discipline, Advancing SDGs

It’s been over half a century since Nepal initiated the planned development process. While a lot has been achieved, there are still few anomalies in the process that requires fixing. One of the issues has been the disconnect between periodic plans and annual budgets. Projects that are prioritized in the periodic plans do not materialize if annual budgets do not allocate required resources. Funds allocated for multi-year projects get redirected elsewhere on an ad-hoc basis.

In Nepal, there are several instances to show how this disconnect between plans and budgets has hampered the speed of development, incurred economic losses, and fueled public frustrations. Such a trend in public spending promotes financial indiscipline, and hampers efforts to achieve the Sustainable Development Goals.

There has to be a solution. This video attempts to put into perspective the GON effort to institutionalize SDG-responsive programing and budgeting.

With the support of SDG Joint Fund, the Government of Nepal is introducing a fiscal instrument to bridge this gap at the local level, as part of a joint initiative led by UNDP together with UNCDF and UN Women. The government is now preparing to roll out the Medium Term Expenditure Framework at all 753 local governments. It is a public finance tool which aims to tie the periodic plans with annual budgets as well as the Sustainable Development Goals.

The UN Joint Fund project is assisting the government to publish resource books to guide the local governments on preparing SDG-responsive MTEF and coding their programs and budgets with SDGs, and training the civil servants on MTEF preparation so that they could pass on the knowledge down to the local level.

In practice, a local government adopting MTEF will be bound to allocate funds for all priority projects agreed upon in its periodic plan, irrespective of any changes in the leadership.

While this framework has been in practice at the federal and provincial levels, the Government is now taking it to all local governments. To drive this forward, a squad of officers is being trained so that they could take it down to the local governments. After completing the training, the officials are expected to pass on the knowledge and skills to the civil servants and people’s representatives at the local level through a series of training sessions.

Successful implementation of the Framework in all 753 local governments is expected to help improve overall fiscal discipline, track expenditures and achieve the Sustainable Development Goals.

Read more about SDG Joint Fund: https://www.jointsdgfund.org Read more about UNDP Nepal: https://www.undp.org/nepal Video Production: UNDP Nepal Voice over: Pragyan Joshi, UNCDF in Nepal