Growing amount of arrests mocks govt’s ‘Prosperous Nepal, Happy Nepali’ goal

On July 15, the Office of the Auditor General (OAG) submitted its 57th annual report to President Bidya Devi Bhandari, highlighting the growing trend in arrears in government agencies. According to the report, the office audited 5,619 institutions under federal, provincial, and local government agencies last fiscal year. The OAG found arrears of 4.05% in the federal government, 4.33% in the provincial governments, and 5.25% in the local governments, which means an average of 4.54% of national arrears. When any financial transaction is carried out without providing the required documents and without meeting processes as stipulated by the law, they are considered the arrears, and recurrence of it can mainly be with an intention of financial embezzlement and corruption.

The average 4.54 percentage of the arrears shows how weak our financial discipline and management system is, and how this is affecting the holistic development of the country. This also indicates the country is not fully on the path to ‘Prosperous Nepal, Happy Nepali, rather the glass is half-full only. Maintaining strict financial discipline, zero-tolerance against corruption and full observations of the pillars of good governance can only be the vehicle of attaining the goals, not the recurrence of the stories of the budget arrears, embezzlement, and corruption.  Flaws in the procurement process of the government agencies, ineffective budget and expenditure management, misuse of grants, ineffective revenue administration and weak implementation of financial management policies, public attitudes, and mindsets of the relevant authorities are major shortcomings behind recurrence of such arrears in all the three tiers of the governments. Now, the national priority should be correcting these practices for attaining goals of sustainable prosperity.

To achieve these goals, the OAG can play an important role, but it is restricted to identifying the arrears; it can do nothing in reducing these arrears with a carrot and stick approach. Neither is there any synergetic coordination, collaboration, and cooperation between the agencies such as the OAG and Commission for the Investigation of Abuse of Authority (CIAA). Therefore, every year, as rituals, the OAG hands over the report to the president, highlighting that the failure to implement the laws is the biggest challenge of the government in minimising arrears in all the three tiers of the governments, with no further action from its side. Then, the Public Accounts Committee of the Federal Parliament discusses the report and passes directives to the concerned ministries to eliminate or at least reduce the arrears in the next fiscal year. But, the three tiers of governments, ministries, and their departments hardly follow the directives of the PAC which results in the same or even higher levels of arrears to be noted in the next year.

Many studies conducted to understand the overall governance of the country also demonstrate that there is no strong financial discipline maintained in the use of public funds. These studies also show that corruption is rapidly increasing in the country—be it petty (cash corruption) or grand (policy corruption); the OAG report clearly corroborates these findings. The recurrence of such arrears is not only a financial, technical, and legal issue, but it is also a broader concern about the legitimacy of the governments and political parties of the country. Apparently, the arrests are against the sentiments of the parties’ election manifestoes. The recurrence of arrears is often connected with embezzlement and corruption; it has highly undermined the national image, financial discipline, and fundamentally, the key pillars of good governance such as accountability, transparency, effectiveness, participation, legitimacy, and the rule of law. The increasing rate of arrears in the use of taxpayers’ money is an immense disrespect for peoples’ handwork, consciences, and will to sustainable development and prosperity.

Now, the question is how the problem can be solved and the actual practice of zero tolerance against corruption is established. There are at least six integrated approaches to achieve the goal discussed in the preceding paragraphs.

First, the most important approach to ensure fiscal discipline is to modernise the existing accounting system by adopting the electronic transaction system (ETS) at all three levels of the governments. Second, providing necessary legal, technical, and financial management skills to all the relevant staff and elected officials to handle the ETS for maintaining strict financial discipline is also necessary. Third, strengthening financial monitoring, evaluation, and verification system are required. Here, caution needs to be taken to avoid the same official/institution as fund provider, monitor, evaluator, and a verifier to avoid conflict of interests.

Fourth, building a strong and consensus-based partnership for national development among bureaucrats, elected officials, and the public, is crucial. In the case of embezzlement, all public office bearers should be given severe punishment. Fifth, the attitude, behaviours, and mindsets of public officials should be changed. Everyone should understand that development with due processes can help the country move up in a short span, ensuring benefits for all Nepalis, but increasing arrears and embezzlement for their personal interests will make the nation always poorer although a few of  ‘them’ may become filthy rich. This can be achieved by practising accountability, transparency, effectiveness, and public legitimacy. Sixth, the governments should not only engage in promising zero-tolerance against arrears and corruption but also demonstrate it in action, by punishing those who have been found guilty of such crimes. For this, synergetic coordination, collaboration, and cooperation among the institutions such as the OAG, the CIAA, the PAC, and the judiciary are paramount along with the ‘willpower’ of the governments.

Executing these recommendations in actions lead the country from poverty to good governance, and the slogan of ‘Prosperous Nepal and Happy Nepali’ can be achieved.

Dr Pandey is the Programme Coordinator at the Community Development Programme, School of Arts, Kathmandu University. His areas of expertise are public policy and environmental affairs.