New Budget in new format
KATHMANDU, JUL 12 -
Breaking with tradition, the new budget will be presented under three major headings—income, expenditure and financing. Financing is a new heading that will be included izn the budget henceforth.
The Finance Ministry from the upcoming budget is adopting a new system so as to make the budget compatible with international practice. Although the government had decided to implement the new system last year, it could not be done due to budget delay. “The move has been taken to make Nepal’s accounting system compatible with international accounting,” said an official of the Financial Comptroller General Office (FCGO), which keeps the account of the government’s income and expenditure.
As per the new classification, any expenditure under the grants and subsidies heading will be considered as recurrent expenditure. Therefore, grants and subsidies that currently fall under capital expenditure will be moved to recurrent expenditure. With these changes, it may come as a surprise to see a rise in recurrent expenditure and decline in capital expenditure in the new budget.
According to the ministry, revenue and grant will be shown in the income part instead of revenue. Under this heading, tax, other revenues and foreign grants will be included. The principal refund that is currently shown in the revenue heading will be moved to financing part. Similarly, the principal payment will be moved from the expenditure part. “The changes are in line with the shift to accrual accounting,” said ministry official.
Accrual accounting is a method that measures the performance and position of an institution by recognising economic events regardless of when cash transactions occur. Goods are also included in the accounting system.
The new budget will have loan investments, capital investment, foreign loans and borrowing under the financing heading. It will be shown under this heading after adjusting refund of loan investment and principal payment of foreign and domestic borrowing.
With these changes, the ministry says the new budget will follow the International Monetary Fund (IMF)’s government financial statistics manual (GFSM) 2001. “The existing system is impractical, as investment in corporations is categorised as expenditure although it yields return later,” said FCGO official. “Bringing such investment under the financing heading will give a clear picture of what reality is.”
Likewise, the government expenditure will have 10 main headings compared to seven earlier. The new budget will have 67 line items under the recurrent expenditure, 11 under capital expenditure and 16 under financing part. The earlier budget used to have 33 line items under recurrent and 19 under capital expenditure.
Now, there will be only a single book instead of earlier three—estimates of expenditure, Red Book and White Book.
Source: Kantipur
Breaking with tradition, the new budget will be presented under three major headings—income, expenditure and financing. Financing is a new heading that will be included izn the budget henceforth.
The Finance Ministry from the upcoming budget is adopting a new system so as to make the budget compatible with international practice. Although the government had decided to implement the new system last year, it could not be done due to budget delay. “The move has been taken to make Nepal’s accounting system compatible with international accounting,” said an official of the Financial Comptroller General Office (FCGO), which keeps the account of the government’s income and expenditure.
As per the new classification, any expenditure under the grants and subsidies heading will be considered as recurrent expenditure. Therefore, grants and subsidies that currently fall under capital expenditure will be moved to recurrent expenditure. With these changes, it may come as a surprise to see a rise in recurrent expenditure and decline in capital expenditure in the new budget.
According to the ministry, revenue and grant will be shown in the income part instead of revenue. Under this heading, tax, other revenues and foreign grants will be included. The principal refund that is currently shown in the revenue heading will be moved to financing part. Similarly, the principal payment will be moved from the expenditure part. “The changes are in line with the shift to accrual accounting,” said ministry official.
Accrual accounting is a method that measures the performance and position of an institution by recognising economic events regardless of when cash transactions occur. Goods are also included in the accounting system.
The new budget will have loan investments, capital investment, foreign loans and borrowing under the financing heading. It will be shown under this heading after adjusting refund of loan investment and principal payment of foreign and domestic borrowing.
With these changes, the ministry says the new budget will follow the International Monetary Fund (IMF)’s government financial statistics manual (GFSM) 2001. “The existing system is impractical, as investment in corporations is categorised as expenditure although it yields return later,” said FCGO official. “Bringing such investment under the financing heading will give a clear picture of what reality is.”
Likewise, the government expenditure will have 10 main headings compared to seven earlier. The new budget will have 67 line items under the recurrent expenditure, 11 under capital expenditure and 16 under financing part. The earlier budget used to have 33 line items under recurrent and 19 under capital expenditure.
Now, there will be only a single book instead of earlier three—estimates of expenditure, Red Book and White Book.
Source: Kantipur
