Nepal | August 10, 2020

Capital budget spending at two-decade low of 40 per cent

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With just two days remaining for the 2019-20 fiscal year to end, capital budget expenditure throughout the year stands at one of the worst ever at 39.62 per cent.

Officials at the Ministry of Finance said capital expenditure during the current fiscal year, which was primarily affected by the COVID-19 pandemic, is the lowest in the last two decades. “As expected, capital expenditure this fiscal has been the lowest in the last two decades. The expenditure has been low across all levels of government,” said Uttar Kumar Khatri, spokesperson for MoF.

As per the statistics of the Financial Comptroller General Office, the government has managed to spend Rs 161.65 billion or 39.62 per cent of Rs 408 billion allocated capital budget for the year.

Low expenditure of the capital budget means that development activities during fiscal 2019-20 also was severely affected.

Development works, including different mega projects, have been affected ever since the government imposed the nationwide lockdown on March 24 to contain the spread of the coronavirus. Though the government has eased the lockdown lately, development works are still not being carried out in a full-fledged manner due to lack of raw materials and other hurdles caused by the contagion.

The budget spending capacity of the government, especially the capital budget, has always been low and questions are always raised about this lack of planning. The government has always failed to maintain uniformity in budget expenditure throughout the year (every month), and in the past it had been haphazardly spending the capital budget in the last couple of months of the fiscal year to meet its expenditure targets.

However, the government’s tendency to boost capital budget spending during the final months got affected this fiscal due to COVID-19 and the lockdown which has subsequently led to the lowest capital budget expenditure in 2019-20.

Experts say that the government’s failure to plan and implement effective budget spending strategy has led to low expenditure of capital budget every year. “The COVID-19 has become a ‘good reason’ for the government to defend low capital expenditure this year while capital budget spending was low even before the COVID-19,” said economist Biswo Poudel, adding that budget spending will not increase unless the government makes necessary structural reforms.

The overall budget expenditure of the government so far stands at 67.74 per cent or Rs 1.038 trillion of Rs 1.532 trillion budget for fiscal 2019-20.

While the recurrent expenditure stands at Rs 770.55 billion or 80.51 per cent of Rs 957.1 billion allocated for the year, expenditure under refinancing stands at Rs 106.18 billion or 63.26 per cent of Rs 167.86 billion allocated for the year.

A version of this article appears in e-paper on July 14, 2020, of The Himalayan Times.

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