Nepal | May 20, 2019

Govt unlikely to meet revised capex target

Himalayan News Service

Kathmandu, May 27

It seems the government will miss the revised target of capital budget spending as capital expenditure stands at just Rs 104.92 billion against the revised target of Rs 262 billion in the first 10-and-a-half months of this fiscal.

Capital expenditure so far is very low — only one-third of the allocated amount of Rs 311.95 billion — according to the Financial Comptroller General Office (FCGO).

The Ministry of Finance had revised the development budget expenditure target during the half yearly review of the budget and it had lowered the capital budget expenditure target from allocated Rs 311.95 billion to Rs 262 billion. However, it seems unlikely that the government will be able to meet the revised target as well.

Slow progress of national pride projects, snail-paced post-earthquake reconstruction works and delay in the approval of the programmes from the National Planning Commission are considered to be the major reasons behind the low capital expenditure.

Development budget spending had remained slow in the last two consecutive fiscals due to the devastating earthquake followed by the border blockade.

Public finance

Data of first 10 and 1/2 months of this fiscal. Source: FCGO

Still, Finance Secretary Shanta Raj Subedi is optimistic that the government will be able to spend around 80 per cent of the allocated amount in this fiscal as government expenditure will rise after releasing payment to the contractors. “The government releases payment to the contractors after completion of assigned works and there will be significant progress in the capital budget spending by next month,” he said.

He further said that though the slow progress of the priority projects resulted in low capital budget spending, the projects that have been performing well have been extended enough resources so that they can be completed within the stipulated timeframe.

The economy has witnessed multiple challenges due to slow capital expenditure. One of the glaring examples is the situation facing banks and financial institutions (BFIs), which are facing difficulties in deposit collection as there is lack of funds in the market. There is low gap in the government’s revenue collection and overall expenditure — recurrent, capital and financing. As per the data unveiled by the FCGO, the government has collected a total of Rs 481.83 billion in revenue in the first 10-and-a-half months of this fiscal against overall budget expenses of Rs 540.66 billion.

At the same time, the government’s treasury surplus has ballooned to Rs 254 billion in the first 10 months of this fiscal, which means that the government lacks the capacity to spend despite having enough resources.


A version of this article appears in print on May 28, 2017 of The Himalayan Times.


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