KATHMANDU: The government has allocated a budget of Rs 52 billion for pensions in the current fiscal year (FY) 2080/81. However, the liability exceeds Rs 77 billion. Consequently, the Pension Management Office had to request an additional Rs 25 billion from the Ministry of Finance to meet its pension obligations. This additional budget was sourced from the contingency funds under various headings. A total of Rs 77.50 billion is being spent on pensions this year with the additional allocation. Bishnu Prasad Kharel, head of the Pension Management Office, reported that Rs 75.82 billion has already been spent.

Kharel noted that despite the increasing need for a larger budget to cover mandatory pensions, the government consistently allocates less than required amount.

"The budget set aside every year is not enough," he told New Business Age.

For the upcoming fiscal year 2081/82, the government has again allocated an insufficient budget of Rs 75 billion for pensions, even though the current year's requirement is higher than that. Officials predict that the liabilities will continue to increase, making it impossible to meet next year's obligations with the allocated budget.

Despite requesting approximately Rs 78 billion for the next year, the government did not fulfill this request. Each year, pension liabilities increase by around Rs 1.5 billion. Given that Rs 77 billion will be spent this year, the requested budget increase was necessary, but the source of funds remains unconfirmed, according to Kharel.

Officials warn that without timely additional budget allocations, there will be problems in pension distribution.

Finance ministry officials explained that they could not allocate the requested amount due to budget constraints. A senior official from the Budget Division admitted that the current year's pension budget was less than requested.

"Even if the allocation under the heading of pension is insufficient, the government cannot ignore its liability," the official told New Business Age. "Additional funds are released from various headings."

The official assured that the law allows for the release of additional budgets, so there should be no issue.

Former Deputy Auditor General Maheshwar Kafle said that the government should not be careless about mandatory obligations. According to him, the Appropriation Act and budget formulation directives mandate prioritizing mandatory obligations before allocating funds elsewhere.

The Ministry of Finance, therefore, cannot overlook these obligations in the budget.

"The government cannot ignore mandatory obligations," he said. "If the government does not allocate enough budget, it shows the government’s dishonesty."

Experts argue that failing to allocate sufficient funds for mandatory obligations undermines economic discipline and good governance. They warn that using contingency funds for this purposes is inappropriate.

Kafle, an experienced auditor, noted that budget indiscipline has become rampant in recent years. "Although the law allows only 10 percent of the money to be transferred, this provision has been misinterpreted, leading to additional withdrawals and transfers," he said.