EC Decision
Positive Sign For Polls

By Shirish B. Pradhan

IF everything goes well fifteen million Nepalese people will exercise their voting rights on November 13, 2002, which will not only avert the possible constitutional crisis but also give a way out to the utterly confusing and chaotic political situation prevailing in the country. The decision made by the Election Commission regarding the longstanding dispute between two warring factions of the Nepali Congress party over the election symbol has in a way cleared doubts about the forthcoming mid-term polls. The Election Commission has hit two birds with a single aroow: It has given official recognition to the Nepali Congress Party headed by former Prime Minister Girija Prasad Koirala and at the same time provided an opportunity to the other faction of NC led by Prime Minister Sher Bahadur Deuba to contest the election under the banner of a new party and a new symbol. Prime Minister Deuba had been voicing that he could not contest the election as an independent candidate. The EC had duly honoured the Prime Minister's view by registering his new party and giving a new election symbol.

Proof

Though the Commission's decision has been interpreted by some people as lacking strong determination, it has proved that the Commission does not allow any influence on it no matter however strong it might be. The decision given by the Commission against the Deuba faction also indicates that the forthcoming election will be free, fair and impartial. While making its decision the Commission did not come under the influence of the government as expected by many political analysts. In fact, the EC being an autonomous constitutional body, can make independent judgement without toeing to anybody's pressure.

The EC's verdict has a way helped generate a kind of election fever in the country, which was not geared up until now for the November polls. There was a confusion in both the factions of the Nepali Congress regarding the election symbol. But now the uncertainty has ended and both the factions of NC began to prepare for the polls. Seven weeks are hardly left for the election so, this time the candidates will have little opportunity to visit door to door to lure their voters. But there are other options available to them due to the advanced technology and the progress made in the field of information technology. Electronic campaigning may be a good option for the candidates to spread their message across the country. There are nearly two dozen FM stations and two television channels and more TV channels are in the pipeline. Thus, the candidates may exploit this new opportunity for campaigning purposes. The Internet and E-mail facilities can also be utilised as the possible alternative mediums to attract voters.

The Election Commission is considering to hold the polls in a phasewise manner to ensure security and safety. It is certain that the November elections cannot be held without improving the present law and order situation in the country. The deteriorating security situation and the growing Maoist threat have created suspicion among the ordinary people whether the polls will be held on time or not. Therefore, it is the responsibility of all the concerned parties including the government as well as the opposition parties to raise the confidence of the common people before the polls. However, the government has assured to provide full proof security during the polls. Each and every candidate will be provided security, assured Home Minister Khum Bahadur Khadka. The Army, Armed Police Forces, Nepal Police as well as ex-armymen will be mobilised to ensure security at the polling booths.

There is still a possibility of the Maoists coming to dialogue for peaceful solution to the six year long insuregncy before the election. Maoist leaders have recently offered ceasefire and hold peace talks with the government. The government has also made it clear that the Maoists should be honest in their proposal for dialogue. If the two sides come together before the general election and hold meaningful dialogue, it would help in creating a conducive atmosphere for the polls. By taking part in the election or at least not disturbing it the Maoists should also prove that they do not go against the aspiration of the people. If they are really serious about safeguarding the achievements of the 1990 popular movement, they should allow the election to go without any problem.

At present there is no elected representative in the country as both the House of Representatives as well as the local bodies have been dissotneel. Such a situation should not continue for a long time if we are to safeguard multiparty democracy. All the democratic and leftist forces should be united to protect the present democratic system, which they have restored through the popular movement of 1990. Thus, the November election should be held on time in a free, fair and impartial manner.

Lesson

The recently concluded general elections in Kashmir in India despite the extremist threat may help us learn how to prepare for the November polls. The difference between our parliamentary election and the one held in Indian state of Jammu and Kashmir is that in Kashmir there was external threat whereas here it is internal threat that is creating problem. So we must learn from the recent polls in Kashmir and improve our security arrangements to ensure safety of the voters, employees and the candidates during the polls. Timely election is the only option available for us to save the country from constitutional crisis as well as the present political stalemete.

Public Expenditure Management

By Durga Nidhi Sharma

THE multiyear dimension of budgeting is essential for bringing the annual budget into conformance with acceptable fiscal objectives. If the annual budget does not subscribe to the global norms they will not be achieved and the government will risk losing control of its fiscal condition.

Bridge

Multiyear Budgeting (MYB) is the bridge between aggregate medium term targets and annual budgets. MYB is necessary because of investment expenditures which often occur years after and the budget makes provision for them. In 1960s and 70s MYB was a planning device, a means of identifying programme initiatives and setting aside funds for them in future budgets. In this case MYB was itself an engine of budgetary expansion. But as the rate of public sector enlargement became unsustainable, MYB was seen as an inappropriate approach. Economic turbulence and unpredictability had rendered MYBs unreliable guides to future fiscal and programme policy.
In response to this concern, in 1980s and 90s, MYBs has been reoriented as "Projections" instead of plans and "Constraints on future funding", instead of instruments of programme expansions. Consequently, UK introduced "Cash Planning" instead of "Volume Planning". Other countries started to make projections on existing policy only - no provision for policy initiatives or changes. A baseline was drawn and this baseline conveyed a powerful message - "existing programmes has already claimed all future resources and there was no margin for new spending schemes". This concept is being more powerful in shaping resources. Basically, MYB shows financial constraints. Annual budget should fit within such constraints. If the government wants to insert new programme or projects it has only two options - revenue increase of programme cutbacks.

Nepal has already announced multiyear funding initiatives. Budget speech 1997/98, reads as "National Planning Commission will be made more active in project selection, monitoring, and evaluation. Ministry of Finance will be required to prepare budget on the basis of the three year rolling expenditure plan". But such required preparation never started. Budget speech 1998/99 reads as "A concrete system will be developed to improve productivity in public expenditure. In order to streamline the earmarked expenditure amount within the budgetary limit, expenditure pattern will be reviewed". The implementation status of this policy declaration was a result of budget formulation manual, 2057. Expenditure pattern is not yet reviewed. Budget Speech 1999/2000 highlights the current practive of project selection, and ad hoc selection of projects and ineffective implementation. To overcome this situation para 64 reads as "… unproductive expenditures will be contained through the proper fiscal management. The tendency of scattering the resources will be discouraged and in the mean time due consideration will be given in the prioritisation of the developmental expenditure by selecting the new project based on utility, capability, cost benefit, and availability of sustainable resources. On the ongoing projects and reevaluation and priority will ascertained accordingly". This policy declaration indicates project selection criteria such as pre-feasibility and feasibility studies, drawing-design-estimates, etc. Then such projects will be selected and budgeted. But such initiatives were not properly followed in project selection.

Budget Speech 2000/01 reads about public expenditure system which is unbelievably burdened with economically unfeasible projects. A compulsory investment in those sectors was a most. In order to improve the present situation, the following measures will be adopted from the next fiscal year: adopation of performance-based funding process and begin multi-year programming in the selected projects enhancment of the level of funding to feasible projects identified and recommended by the Expenditure Review Commission and guarantee of periodic monitoring and evaluation. This statement clears that MYB (in selected projects) will be launched. Budget Speech 2001/02 emphasises the introduction of MYB. Para 70 states - In the context of starting he multi-year budget system, expenditure ceilings, and targets of major sectors of the economy will be prepared for these years beginning from the coming fiscal year. The concerned line agencies will prepare their programmes accordingly.

Budget Speech-2002 has clearly stated that necessary resources are made available to high priority projects of prioritised in line with the effective implementation of mid-term expenditure plan. To make the effective implementation of the projects, budget release process will be tied up with project outputs.

The budget speech of various year has indicated the necessity of MYB. But never started. So, policy declaration should match with implementation process. In Australia, Department of Finance complies forward estimates of outlays in each of the next three years. Such projections include only the estimated costs of approved programmes in the absence of policy change. The costs of expiring programmes that are likely to be renewed are separately identified. Then cabinet indicates broad aggregate targets for the budget and forward years. Decisions made by the government in the budget process are additional to the baseline forward estimates which do not include any allowance for policy change. Budget decisions focus, therefore, on incremental adjustments-up or down-to this baseline. Expenditure Review Committee (ERC), a sub committee of senior ministers, will work on details. For example, in 1993-94, the cabinet decided that most of policy initiatives were to be full offset by savings. Then ERC, within this decision, worked in details.

In New Zealand, budget decisions are organised around a "baseline" process in which departments are invited to submit draft budgets at two periods, usually October-November and February-March. Ministers who make decisions as purchaser of output, on an accrual rather than a cash basis. The government believes that output budgets better inform ministers as to what is being achieved and enable them to judge whether the outputs meet priorities.

Nepal is in a position of initiating MYB. The fiscal year 2002/03 development budget contains such one hundred priority projects of Rs. 16 Billion 836 million budget which have been prioritised in budget release and assured against budget cuts. Among those: education has eight, health twenty, drinking water eight, agriculture twenty, irrigation twelve, roads eighteen, and electricity fourteen. This is a good start for MYB.

His Majesty's Government has identified one hundred projects as a priority-one projects. As per the multi year budgeting scheme or, National Planning Commission will prioritise all projects and programmes along with three-year resource estimates for M/TEF. The budget estimate (generally termed as Red-Book) document has indicated that such exercise will be the integral part of Red-Book. While Melemchi Drinking Water Project, Mid-Marsyangdi Project, and Basic and Primary Education Programmes have been treated as priority-one projects, the standard norms of P1, P2, P3 i.e. 40:30:30 percentages has relatively been adjusted.

New Arena

These two countries have two different dimensions of MYB processes. Both have adopted accrual budgeting. But New Zealand budgets in outcomes (ministers act as purchaser) and Australia funds in outputs. Nepal has, not started even modified cash-based accounting and budgeting system. So accrual system is very far. Without accrual system, the full implementation of MYB is very difficult. So, accrual is the precondition of MYB. Country Financial Accountability Assessment (CFAA) has been initiated recently. Current fiscal year is 1st year of 10th plan. Medium Term Expenditure Framework (MTEF has been accepted as an engine to shape public expenditure. Nepal Development Forum (NDF) 2002 and London meeting has opened new arena for effective implementation of projects as a precondition of budgetary support. In this case, a workable, doable, and achievable target-based budget implementation plan should be developed and closely monitored. This is a time-driven strategy of the day.