Government Introduces New Policy to Reduce Distortions in End-of-June Spending

The government has announced a new policy aimed at reducing distortions in end-of-June spending for the upcoming fiscal year 2083/84, which includes initiating procurement processes from mid-July and implementing a zero-day procurement policy. President Ramchandra Paudel highlighted plans in the policy and program to cut public expenditures, reform public institutions, and foster collaboration with the private sector.

The government intends to hold project leaders accountable by employing digital progress tracking and simplifying approval procedures through an e-portal system. The announcement was made on 28th Baishakh in Kathmandu during the presentation of the upcoming fiscal year’s policy and program in Parliament.

“Starting procurement from Shrawan (mid-July) and enforcing a zero-day procurement policy will end the distortion in spending heavily concentrated in the month of Ashar (mid-June to mid-July),” the policy document stated.

According to the Office of the Auditor General’s data, in fiscal year 2081/82 alone, the government spent about 22.5% of its capital budget in Ashar month, despite having set a target capital expenditure of NPR 3.52 trillion for the entire year. Of the total annual capital expenditure of NPR 222 billion, around NPR 7.93 billion was expended during Ashar. During this period, overall budget spending also surged to NPR 233 billion in Ashar alone.

This trend of delayed procedures causing bulk spending in the last month of the fiscal year has been a persistent distortion in recent years, raising concerns about the quality of budget utilization and development outcomes. To address this, the government plans to mandate comprehensive project reports, environmental clearances, and land acquisition prior to budget approval. However, despite similar attempts in the current fiscal year, implementation was low.

Data from the Auditor General indicates that as of the 10th month of the current fiscal year, only 26.87% of the capital expenditure target has been achieved.

Experts have recommended excluding projects from the budget if their preparatory work is incomplete and ensuring contract completion before the new fiscal year begins.

Under President Paudel’s policy framework, large procurements will follow an open public procurement policy. Prioritizing cuts in public spending, the government is preparing to emphasize expenditure restraint in the upcoming budget, alongside improving public institution efficiency and ensuring prompt service delivery.

The program outlines plans to consolidate public institutions, strengthen partnerships with the private sector, introduce strategic partners, or divest where suitable in the next fiscal year.

Project leaders will bear enhanced responsibility for project implementation with clear targets, budgets, and timelines. The government will implement performance agreements, digital progress monitoring, and remove barriers related to land acquisition and forestry until project completion, ensuring key personnel remain assigned until projects are concluded.

Furthermore, environmental impact assessments, land acquisition, and forestry-related approval processes will be streamlined through an e-portal system, balancing infrastructure development with environmental protection.

To achieve the goal of producing 30,000 megawatts of electricity over the next decade, the government plans legal revisions concerning energy, forestry, land, and environment and will establish a one-window system.

To accelerate project implementation, affected community members will be offered options for share investment instead of just compensation.

Additionally, the government has reiterated its commitment to ensuring private sector participation in electricity generation, transmission, distribution, and trade.

Reflecting the concept of a “borderless economy and weightless trade,” the national economic strategy for the coming year will focus on this paradigm. The policy and program emphasize developing key economic transformation sectors such as IT-based service exports, hydropower, tourism, high-value agriculture, and green industrialization.