Despite clear legal provisions barring budget allocation for projects outside the National Project Bank, the government continues to breach this rule year after year.

Rule 26(5) of the Financial Procedures and Financial Responsibility Regulations, 2020 states that “budget allocation for projects not included in the National Project Bank shall not be permitted.” However, five years on, the Project Bank remains ineffective, with budgetary decisions repeatedly bypassing legal safeguards. Regulatory and monitoring bodies have consistently flagged these violations, but their recommendations remain unimplemented.

The Project Bank was established to curb arbitrary budgeting and prevent politically motivated project distribution. However, instead of enforcing budget discipline, it has increasingly become a tool for manipulation. Ministries continue to include projects outside the bank in the annual budget, while some registered projects are removed with apparent bias—continuing a trend seen in previous fiscal years.

Projects registered in violation of standards

Government standards require that new projects for the upcoming fiscal year be submitted to the Project Bank by mid-April. But as late as two days before the budget announcement for FY 2025/26, ministries were still submitting proposals. The National Project Bank (Operation and Management) Standards, 2024 clearly states that projects must be submitted by mid-March or mid-April, depending on the type.

Ministry of Finance Spokesperson Shyam Prasad Bhandari and National Planning Commission Joint Secretary Arjun Bhandari confirmed that project submission is still ongoing by the time this news was prepared.

Political interference, staff resistance

Despite being legally mandated, the Project Bank has not been implemented effectively due to political pressure and resistance from bureaucracy. Former National Planning Commission Vice-Chairman Dr. Min Bahadur Shrestha said that politicians often ignore legal and procedural discipline, focusing only on pushing projects they favor. “Last year, when we insisted that only listed projects receive budget allocations, ministries and staff did not cooperate,” he said.

Former Finance Secretary Madhu Kumar Marasini echoed the concerns, saying the failure stems from a lack of understanding and training among bureaucrats. “Even when the law made it mandatory, there was no clarity on project selection. Many outdated projects were added without proper quality checks,” he added.

Massive inflow of projects without scrutiny

Data from the Planning Commission reveals a significant rise in project entries. By 2020/21, 6,644 projects were listed. In 2021/22, 99 were added; in 2022/23, 39; and in 2023/24, over 1,100. This fiscal year alone, 221 new projects were included.

Last year, the Ministry of Urban Development added 7,377 projects, followed by 5,294 from the Ministry of Physical Infrastructure and Transport and 2,859 from the Ministry of Drinking Water. Many were criticized for being included without technical preparation, environmental assessments, or cost analysis. However, officials defended the move, claiming the numbers reflected the inclusion of both small-budget and program-based projects.

Auditor General highlights violations

The Office of the Auditor General has consistently questioned the effectiveness of the Project Bank for five years. The 62nd report noted that budget was allocated for projects not listed in the bank and flagged violations of standards such as minimum project cost thresholds.

As of 2023/24, out of 18,120 registered projects, 7,705 were ongoing. Yet, the Ministry of Physical Infrastructure received budget allocations for 3,990 projects—805 of which were not in the Project Bank. Similarly, the Ministry of Urban Development received funds for 4,962 unregistered projects.

The Auditor General has urged the Planning Commission and Ministry of Finance to ensure that only listed projects receive budget approval during the annual planning process.

Arbitrary cuts without impact assessment

With budgetary resources under pressure, the government is now planning major cuts. The Planning Commission and Ministry of Finance indicated that about 10,000 to 11,000 projects will be removed from the Project Bank. However, no clear study has been done to assess the implications of these cuts.

Officials claim the cuts follow legal standards, but critics say there is no clear criteria for determining which projects to eliminate or how it will impact development outcomes.

At a pre-budget discussion organized by SEJON a month ago, Finance Minister Bishnu Prasad Poudel acknowledged inefficiencies in budget allocation and promised reforms. “We must reduce the gap between allocation and implementation. He vowed to make the 2024/25 budget more realistic and implementation-focused.

New standards aim for accountability

The National Project Bank (Work Operation and Management) Criteria, 2024 requires projects to be listed with objectives, results, budget, and timeline. Projects using public funds—including grants, loans, or public-private partnerships—must be included in the bank. The criteria also require a clear identification of funding sources.

The law mandates that only projects above Rs 30 million for federal and Rs 10 million for provincial governments should be listed. Yet these provisions continue to be routinely bypassed. -- RSS