Reforms needed in COVID fiscal management

Public financial management experts have highlighted the need to initiate reforms in regard to transparency and citizen engagement in the design and implementation of fiscal policy packages, and oversight by the parliament and supreme audit institution between and beyond the pandemic.

At a virtual sharing of the findings of COVID rapid assessment report, ‘Transparency and Accountability of COVID Fiscal Management in Nepal’, the experts said responding to the pandemic in an open and accountable manner is not only a way for the government to show its commitment to the wellbeing of its citizens but also a way to ensure tangible benefits for everyone from reducing the risks of corruption and misuse of public resources to ensuring more equitable and effective policy outcomes.

National Planning Commission’s Secretary Kewal Prasad Bhandari highlighted the government’s response to COVID-19 management through different fiscal and monetary measures and also underlined the need to institutionalize citizen engagement mechanisms to tap citizenry power to effectively manage the crisis.

On the occasion, Federal Parliamentary Secretariat Spokesperson Dr Rojnath Pandey said the finance committee had meticulously conducted pre-budget discussions in the provinces to provide inputs to the executive in the formulation of fiscal policies but the recommendations and inputs of the parliament were not reckoned with in the budgetary process.

Deputy Auditor General Ramu Prasad Dotel shared that the Supreme Audit Office has completed the audit process of emergency public expenditures in course of the response to the pandemic last year and is publishing the audit report with its findings and recommendations within a month. “Nepal has initiated some best practices on transparency arrangements but is weak in placing participation mechanism”.

Also speaking on the occasion, Karobar National Daily Chief Editor Kuvera Chalise highlighted health as a public good and the fiscal packages should, by all means, be tailored to respond to the issue accordingly through a more open, accountable, and transparent manner.

Pukar Bam, one of the campaigners of ‘Enough is Enough Campaign’, expressed displeasure on the government’s failure to meticulously address the design and delivery of COVID response packages pinpointing unaccountable practices in the fiscal management of COVID, including non-disclosure of fiscal information. He also stressed the need to bring the non-state apparatuses besides state mechanisms to the domain of accountability in Nepal.

Member-Secretary of PEFA Secretariat Nepal, Gorakh Bahadur Shahi shared PEFA with its catalytic role was focused to continue with reforms in PFM putting citizen engagement perspective in the center.

Presenting findings of rapid assessment ‘transparency and accountability of COVID fiscal management’, budget researcher Krishna Sapkota shared that the assessment of emergency fiscal policy packages focused on three critical pillars of accountability: public access to relevant information; oversight by the legislature and national audit office; and opportunities for citizen engagement which help ensure resources are used effectively to meet peoples’ needs.

The finding of the assessment in Nepal indicate that the overall transparency of the stimulus and response packages was limited and the mechanisms for citizen engagement in their formulation and implementation were minimal. There are opportunities to build on oversight measures to ensure greater accountability of the response and recovery.

Among the key recommendations highlighted to strengthen accountability to ensure equitable and effective response include publishing monthly progress reports on the implementation of measures in the budget speech, including data and analysis on budget execution and performance, disaggregated by the impact on disadvantaged groups, including women and girls; disclosing all details related to procurement contracts linked to the emergency spending wherever possible in open formats; establishing inclusive public participation mechanisms in the formulation and implementation of emergency fiscal measures and strengthen the roles of oversight agencies including the legislature.

The report further recommended to introduce and/or review and update legal and regulatory framework to clarify roles, responsibilities, and approaches to be adopted during times of crisis, for example in the areas of resource management, procurement, oversight, and participation, and ensure the audit findings of the OAG are acted upon swiftly and that substantive audit follow-up is strengthened beyond the emergency.

Sharing the findings of the global survey report of COVID-Module, Suad Hasan from International Budget Partnership (IBP) said overall Governments are falling short of managing their fiscal policy response to the crisis in a transparent and accountable manner. “More than two-thirds of 120 countries’ governments surveyed have only provided limited or minimal levels of accountability in the introduction and implementation of their early fiscal policy responses”.

Claire Schouten from IBP noted that Governments can strengthen capacities and basic systems for accountability in the annual budget cycle, to be better prepared for future crises and international actors can support governments to be fully open and accountable in their fiscal policy response to present and future crises.

PFM reform advocate Taranath Dahal underscored the need to promote open budgeting which is crucial to support more efficient resource allocation, improve service delivery and earn public trust.

The assessment of the emergency fiscal packages introduced by the Nepal government in the fiscal year 2020/21 was undertaken by Freedom Forum in collaboration with IBP and consultations with different actors of accountability systems, including government and legislature.