4.2 Public financial management: planning and budgeting system in Nepal

Planned Development in Nepal: Foundations, Challenges, and Solutions

Foundations of Planned Development

Planned development focuses on achieving specific goals through effective resource mobilization and systematic implementation. In Nepal, the foundations of planned development include the following:

1. Identification of Problems or Needs: Clearly identifying priority needs and problems is the initial foundation of planning, ensuring that plans are targeted and effective.
2. Determination of Goals, Objectives, and Activities: Plans outline clear goals, objectives, and related activities to address identified issues.
3. Resource Projection and Mobilization: Estimating and arranging necessary resources (human, financial, technical) for plan implementation.
4. Implementation, Monitoring, and Evaluation: Establishing action plans, monitoring mechanisms, and evaluation processes to ensure effective execution.

Challenges in Plan Formulation in Nepal

Nepal faces various policy, structural, and implementation-related challenges in planned development:

1. Unclear Vision and Ambitious Goals: Plans often lack a clear long-term vision, with goals that are unrealistic or overly ambitious.
2. Lack of Scientific Prioritization: Prioritization of plans is often based on political influence or access rather than scientific criteria.
3. Dependence on Foreign Aid: Limited domestic resources lead to reliance on foreign aid and loans, posing challenges to sustainability.
4. Lack of Coordination Between Periodic Plans and Annual Budgets: Inadequate alignment between periodic plans and annual budgets hampers effective implementation.
5. Slow Implementation and Weak Monitoring: Delayed implementation and weak monitoring systems make it difficult to achieve expected outcomes.
6. Political Instability: Frequent government changes and policy instability disrupt the continuity and effectiveness of plans.
7. Lack of Stakeholder Ownership: Limited involvement of local communities, private sectors, and other stakeholders results in a lack of ownership.
8. Absence of Impact Evaluation: The lack of systems for evaluating long-term impacts leads to missed opportunities for learning and improvement.

Solutions for Effective Planned Development

To make planned development in Nepal more effective, the following measures can be adopted:

1. Robust Data and Evidence-Based Planning:

• Emphasize the collection and analysis of reliable baseline data for planning.
• Adopt scientific prioritization and goal-setting based on data.

2. Coordination Between Policies, Plans, Programs, and Budgets:

• Align periodic plans with annual budgets and programs to ensure consistency.
• Strengthen the Medium-Term Expenditure Framework (MTEF) to enhance financial management of plans.

3. Increased Stakeholder Participation:

• Ensure the involvement of local communities, private sectors, NGOs, and civil society in plan formulation.
• Promote public hearings and discussions to foster ownership of plans.

4. Effective Implementation and Monitoring Systems:

• Prepare implementation schedules and hold relevant stakeholders accountable.
• Develop IT-based integrated monitoring systems.
• Strengthen third-party monitoring and evaluation mechanisms.

5. Focus on Domestic Resource Mobilization:

• Reduce reliance on foreign aid by enhancing domestic revenue and resource mobilization.
• Expand the tax base and control revenue leakages.

6. Learning from Evaluation and Process Improvement:

• Emphasize impact evaluation to derive lessons for future improvements.
• Adopt the six key evaluation criteria (RCEEIS: Relevance, Coherence, Effectiveness, Efficiency, Impact, Sustainability) to systematize evaluation processes.

7. Political Stability and Policy Continuity:

• Ensure political stability and policy consistency to maintain the continuity of plans.
• Strengthen the role of parliamentary committees and the National Planning Commission.

8. Capacity Building and Technical Improvements:

• Enhance the technical and managerial capacities of personnel and institutions involved in plan implementation.
• Promote the use of information technology in plan formulation, implementation, and monitoring.

Conclusion

Effective planned development in Nepal requires policy reforms, enhanced resource mobilization, increased stakeholder participation, and robust monitoring and evaluation systems. By adopting these measures, plans can be made sustainable, inclusive, and long-term, significantly contributing to Nepal’s economic and social development.