Nepal | April 21, 2019

Full utilisation of capital budget unrealistic

Pushpa Raj Acharya

Kathmandu, January 11

Full utilisation of the capital budget is becoming more and more unrealistic, as this will require the government to spend a whopping Rs 1.5 billion every day for the rest of this fiscal year (ending July 15) on development work.

This calculation is based on the data of Ministry of Finance, which shows that the total capital expenditure as of January 8 stood at Rs 31.65 billion — merely 10.14 per cent of the total allocation of Rs 311.95 billion for this fiscal.

The slackness in capital spending is due to low performance of big ticket projects. According to the MoF, spending of the top 10 ministries that have been allocated the largest chunk, or nearly 72 per cent of the capital budget, stood at just 13 per cent in the review period.

The Ministry of Physical Infrastructure and Transport has spent just Rs 12.19 billion or 16.77 per cent against the allocation of Rs 72.68 billion in the review period. The amount of budget utilised by

the Ministry of Federal Affairs and Local Development, Ministry of Irrigation, Ministry of Urban Development and Ministry of Energy was even less.

The pace of capital expenditure was expected to accelerate this fiscal as the government had presented the fiscal budget one-and-a-half months before the beginning of fiscal year calendar to end the perennial problem of delay in budget approval from the Parliament.

At the same time, the ministries were asked to prepare tender documents and conclude other preparatory work based on the budget presented in the Parliament to expedite development projects.

However, the government agencies have been passing the buck to the National Planning Commission, saying that delay in approval of projects by the commission is hindering the process of ramping up capital expenditure.

“The Ministry of Finance had urged the ministries to authorise their line agencies and projects to spend the budget immediately after the budget was approved from the Parliament, but in reality the NPC had taken the entire first quadrimester to approve the projects,” a high-level source at the MoPIT told The Himalayan Times.

At a time when the government has been criticised from all quarters for slow reconstruction work, the MoF data show only three per cent of the allocated funds were spent for reconstruction in the review period.

The MoF has allocated budget worth Rs 35.28 billion to the National Reconstruction Authority through the Office of the Prime Minister and Council of Ministers, which NRA releases to ministries for reconstruction work.

Madhu Kumar Marasini, chief of the Budget Division under MoF, said it was high time the allocation system was reviewed eyeing the absorptive capacity of particular projects.

“The ministries keep citing usual problems like delay in project approval from NPC, delay in procurement process and local hassles in project implementation for low spending. But this finger-pointing is not getting us anywhere.”

For its part, the MoF has already asked the ministries to surrender the budget for this fiscal if any project is unable to make any headway by the end of the second quadrimester (mid-March). The move is aimed at ensuring that projects making good progress don’t face resource crunch.


A version of this article appears in print on January 12, 2017 of The Himalayan Times.


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