The federal government’s budget formulation for the upcoming fiscal year (FY 2025/26) has been affected due to delays in amending the necessary laws. The National Planning Commission (NPC) has postponed the process of seeking plans and programmes from provincial and local levels, citing the lack of amendments to the Federal Supplementary and Special Grants Work Procedure.

The Ministry of Finance is similarly uncertain about how to proceed with the budget preparation process, as the Financial Procedure and Fiscal Responsibility (First Amendment) Bill, 2081, remains stuck in parliament. Under the existing procedures, the NPC must publish a notice by mid-December to solicit project and programme proposals from provincial and local levels for grants in the upcoming fiscal year. Proposals are then to be submitted by mid-January.

However, the NPC halted this process following the 53rd meeting of the National Development Problem Solving Committee, chaired by the Prime Minister on November 15, which decided to revise the current procedures for supplementary and special grants. The committee directed the NPC to prepare a draft amendment and submit it to the Council of Ministers within three months.

NPC Vice-Chair Prof. Dr. Shivaraj Adhikari stated that while there would be some delays in seeking proposals for these grants, the revised procedures would make the process more equitable. “We have tried to make it equitable by amending the procedure. The commission is in the process of amending the work procedure and sending it to the Council of Ministers,” Adhikari said. He added that the grants would be distributed more inclusively and equitably than in the past and that the timeline for inviting proposals would be extended.

The amendments aim to align supplementary grant allocations with the financial capacity of local levels and provinces, promoting socio-economic equality. Similarly, revisions to special grants seek to ensure balanced development and support for marginalized communities.

Efforts to adhere to a structured budget calendar have faced repeated obstacles. Parliament has frequently raised the issue of fixing the budget calendar, and principles and priorities of the annual budget often lack sufficient discussion. For instance, point no. 29 of the annual budget for fiscal year 2024/25 outlined plans to present the principles and priorities of the appropriation bill in federal parliament by mid-March. To implement this, the government issued the 'Financial Procedure and Fiscal Responsibility (First Amendment) Ordinance, 2080,' which adjusted deadlines for setting budget limits and enabled timely presentation of principles and priorities of budget.

However, this ordinance was not passed by parliament within the required timeframe and was subsequently repealed. The government registered the Financial Procedure and Responsibility (First Amendment) Bill, 2081, in the House of Representatives on August 16 to formalize changes to the budget calendar. Despite this, uncertainty persists regarding whether the upcoming budget will follow the existing Act, last year’s ordinance, or the pending bill currently under parliamentary consideration.  -- RSS