Budget Estimate and Approval Process and LMBIS (Line Ministry Budget Information System)

🎬 Video explanationसरकारी बजेट: जेठ १५, बजेटका प्रकार, ९ चरण र LMBIS

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A budget is the government’s annual plan of estimated revenue and expenditure. Unit 2.2 asks how the budget is estimated and approved and what LMBIS is. Basic budget facts are also in Budget and Fiscal Year of Nepal.

1. Key facts

• Nepal’s fiscal year runs from Shrawan 1 to the end of Asar.
• Article 119 of the Constitution: the Finance Minister presents the annual estimates of revenue and expenditure to the Federal Parliament on Jestha 15 every year.
• The budget is passed through the Appropriation Act (विनियोजन ऐन); taxes are changed through the Finance Act.
• Expenditure heads: current (चालु), capital (पुँजीगत) and financing (वित्तीय व्यवस्था).

2. Budget estimate and approval process (steps)

3. LMBIS

• LMBIS = Line Ministry Budget Information System.
• A web-based system of the Ministry of Finance through which line ministries and their offices prepare and submit budget estimates and programmes.
• Benefits: standard formats, faster consolidation, fewer errors, linking budget with the Chart of Accounts and with monitoring of spending.
• A 2081 amendment to the Financial Procedures and Fiscal Accountability Act added a legal definition of LMBIS.

At the local level, budgets are prepared and managed in SuTRA (Sub-national Treasury Regulatory Application). See Chart of Accounts, TSA, RMIS, CGAS and SuTRA.

How LMBIS login works

LMBIS is not a public website for students. Only government offices use it: each ministry and spending unit logs in at lmbis.gov.np with a user ID and password issued through the Ministry of Finance, enters its budget estimate and programme, and sends it up for approval. If you cannot log in, contact the account or planning section of your ministry, not the general public helpline.

4. Who does what in the budget process

Many exam questions ask for the role of an institution rather than a date. This table puts the main players side by side.

5. A worked example: one office’s budget in LMBIS

The figures below are an example only, to show the flow. Suppose a district-level office receives a ceiling of Rs 2 crore for the coming year from its ministry.

1. List the programmes. The office lists what it plans to do, for example staff salaries, office running costs and a small building repair.
2. Cost each activity. Salaries and running costs (say Rs 1.4 crore) go under current expenditure; the repair (say Rs 60 lakh) goes under capital expenditure. The total stays within the Rs 2 crore ceiling.
3. Enter it in LMBIS. Each activity is entered with its quantity, unit cost and the matching expenditure code from the Chart of Accounts, so it can later be tracked in the accounts.
4. Submit upward. The department and then the ministry check and combine the estimates of all their offices, and the ministry discusses the total with the MoF and NPC.
5. After the Appropriation Act passes, the office receives its spending authority (अख्तियारी) and starts work from Shrawan 1.

Because every office uses the same formats and codes, the Ministry of Finance can add up thousands of offices quickly. This is the main reason LMBIS replaced paper forms.

6. Common problems in Nepal’s budget process

Long-answer questions at Nayab Subba and Section Officer level often ask about weaknesses and how to fix them. The points most often discussed are:

• Low capital spending: capital budgets are often not fully spent, so planned roads and buildings are delayed.
• Spending rush in Asar: a large share of spending happens in the last month of the fiscal year, which can lower the quality of work.
• Weak project readiness: projects are budgeted before land, design or approvals are ready.
• Unrealistic estimates: revenue or spending targets that are set too high make the budget hard to follow.
• Frequent transfers between heads: moving money from one budget head to another during the year weakens planning.

Common solutions suggested: fund only projects that are ready, follow the MTEF, plan procurement early, monitor progress every trimester and hold offices accountable for results.

7. How this topic is asked in the exam

• Objective (Kharidar and Nayab Subba preliminary): fiscal year dates, Jestha 15, Article 119, full forms such as LMBIS, SuTRA and MTEF, and the three expenditure heads.
• Short answer: “What is LMBIS? Write its benefits.” or “Differentiate between the Appropriation Act and the Finance Act.”
• Long answer: “Describe the budget formulation and approval process of Nepal.” Write the steps in order (use the table in section 2), name the body responsible for each step, and finish with two or three problems and solutions from section 6.

Terms that are often confused

• Budget estimate and Appropriation Act: the estimate is the proposal presented to Parliament; the Appropriation Act is the law that allows the money to be spent.
• Appropriation Act and Finance Act: the Appropriation Act deals with spending; the Finance Act deals with changes to taxes and revenue.
• Budget ceiling and budget estimate: a ceiling is the limit given to a ministry to plan within; the estimate is the detailed figure it prepares within that limit.
• Fiscal year and calendar year: Nepal’s fiscal year runs from Shrawan 1 to the end of Asar, so it does not match the Bikram Sambat or Gregorian calendar year.
• LMBIS and the budget itself: LMBIS is the computer system used to prepare and compile estimates; it is not the budget.

Short-answer practice

• Who presents the annual estimates, and when? The Finance Minister, to the Federal Parliament, on Jestha 15.
• Which article of the Constitution covers this? Article 119.
• What does LMBIS stand for? Line Ministry Budget Information System.
• Which ministry runs LMBIS? The Ministry of Finance.
• How does the budget become spendable? Parliament passes it through the Appropriation Act, and authority to spend is then released to offices.