KATHMANDU, Feb 5: The government has capped the validity of its budgetary funding assurance for multi-year contract projects at a maximum of three fiscal years.
Issuing a new guideline on Wednesday, the Ministry of Finance (MoF) stated that the government’s commitment to ensure budgetary resources for multi-year projects will remain valid only for the approved project duration, up to three fiscal years. However, the tenure may exceed three years in the case of national pride projects or projects whose contract period is longer than three years.
The guideline clarifies that the provision refers to the government’s assurance of funding availability which allows ministries and agencies to enter into multi-year contractual commitments based on confirmed future budget support.
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According to the criteria, a multi-year project is defined as a plan with specific objectives, timelines, budgets and cost estimates, comprising interrelated activities extending beyond a single fiscal year. For national pride projects and other eligible multi-year projects, the concerned ministry or agency must obtain formal funding assurance from the government.
To secure this assurance, the ministry or agency is required to submit a proposal to the National Planning Commission, including project details, cost estimates, budget subheadings, preliminary and detailed study reports, approved procurement plans and other required documents.
The guideline also states that if the procurement process is not initiated within the fiscal year in which the funding assurance is granted, the assurance will automatically lapse.
For projects financed through foreign assistance, a separate funding assurance will not be required to initiate multi-year procurement, provided the process remains within the assistance ceiling and the government’s cost-sharing obligations specified in the agreement. In such cases, the government’s financial liability must be reflected in the medium-term expenditure framework.
Last month, the government introduced eligibility criteria for multi-year projects, setting a minimum project cost of Rs 500 million. Under the revised provision, projects with an estimated cost below this threshold will not qualify for multi-year contracts. However, for government building construction and service procurement projects, the minimum cost requirement has been set at Rs 200 million.
