Federal Financial Procedure under the Constitution of Nepal

Question: What Is the Financial Procedure? Explain the Matters Covered by the Federal Financial Procedure under the Constitution of Nepal.

1. Meaning of Financial Procedure

A financial procedure refers to the system established to ensure that government revenue and expenditure are managed responsibly, accountably and transparently. Its major components include budget estimation, budget approval, budget execution, accounting of revenue and expenditure, financial reporting, internal control and auditing.

The financial procedure is based on the principle that public funds must be mobilised and utilised for the maximum benefit of citizens while preventing misuse. In a democratic system, taxation and public expenditure must be authorised by law and subject to the oversight of representative institutions. Accordingly, the Constitution of Nepal establishes financial procedures for all three levels of government.

2. Matters Covered by the Federal Financial Procedure

Part 10 of the Constitution of Nepal, comprising Articles 115 to 125, contains provisions relating to the federal financial procedure. The major matters covered are as follows:

1. No Taxation or Borrowing Except by Law: Taxes may be imposed and loans raised only in accordance with law.

2. Federal Consolidated Fund: Provisions concerning the establishment and operation of the Federal Consolidated Fund.

3. Expenditure from the Federal Consolidated Fund: Rules governing expenditure from the Federal Consolidated Fund.

4. Expenditure Charged on the Federal Consolidated Fund: Provisions concerning expenditures that are charged on the Federal Consolidated Fund.

5. Estimates of Revenue and Income: Procedures for estimating government revenue and income.

6. Appropriation Act: Provisions governing the authorisation of government expenditure through an Appropriation Act.

7. Supplementary Estimates: Arrangements for presenting supplementary estimates when additional budgetary authorisation is required.

8. Vote on Account: Provisions for authorising expenditure in advance under specified circumstances.

9. Vote of Credit: Arrangements for authorising expenditure where the prescribed circumstances require such a mechanism.

10. Federal Contingency Fund: Provisions concerning the establishment and operation of the Federal Contingency Fund.

11. Financial Procedures under Federal Law: Financial procedural matters to be regulated by federal legislation.

Conclusion

The Constitution of Nepal establishes the fundamental legal framework for managing federal revenue and expenditure. These provisions ensure that taxation, borrowing, budget approval and public expenditure operate within constitutional and legal limits. They also provide a basis for parliamentary oversight and financial accountability. Detailed procedures relating to budget execution, accounting, reporting, monitoring, internal control and auditing are further governed by applicable federal laws.

Financial Procedure, Constitution of Nepal, Federal Financial System, Public Financial Management, Loksewa Preparation, PSCInsight