Nepal Agriculture Public Expenditure Review: Successes and Challenges in Aligning Impact and Spendin

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Nepal Agriculture Public Expenditure Review
Successes and Challenges in Aligning Impact and
Spending

• Krishna Prasad Pant, Nepal Government
• Mona Sur, The World Bank

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NEPAL
China
Kathmandu
India
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Agriculture in Nepal

• Employ 2/3 of labor force
• Involves 3.36 million households
• Average land holding 0.79 ha
• Contributes 32 of GDP

• Contribution to the AGDP
• Crops 66.16
• Livestock 25.68
• Forestry 8.07
• Fisheries (inland) 0.09

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Budget Process
National Planning Commission
Ministry of Finance
Ministry of Agriculture and Cooperatives
District Agencies
Dept. Livestock
Dept. Food Tech
Dept. Agri
Dept. Coop
Program Directors
Program Directors
Program Directors
Program Directors
Regional level Offices (Agri., Livestock, Food
Tech, Coop)
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Allocation of the budget higher than ceiling
depends on

• Strength of the proposed program
• Political favor of the Ministers
• Favor given by the Ministry of Agriculture while
  negotiation
• Strength and lobby of the Departments
• Strength, lobby and personal influence of the
  Program Director
• Intention and ability of the program director to
  consume the fund

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Synthesis

• Nobody denies the role of agriculture in Nepalese
  economy
• Public expenditure in agriculture is insufficient
• Allocation of expenditure to different
  sub-sectors not based on analysis, but on hunch
  and power play
• Recurrent public expenditure in agriculture is
  increasing faster than the capital expenditure
• Expenditure in agriculture is not increasing as
  it increased in other sectors
• ODA is not in favor of agriculture
• DFID-ARD Analysis of Public Expenditures in
  Agriculture derives some hard facts.

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Nepal - Public Expenditures by Sector, 1999-2003
Public expenditures on Ag/Ag GDP 4
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Impact of Agricultural Public Expenditures on
Household Welfare Agricultural Production
NE No Effect NA Not Applicable IV
Instrumental variable SE Simultaneous equations