House panel says no to off-budget funding

Kathmandu, November 21

The Finance Committee of the Legislature Parliament has directed the Ministry of Finance (MoF) not to relent to off-budget funding demands of ministries unless they provide compelling reasons.

The instruction comes at a time when many ministries are demanding extra funds for projects and programmes not incorporated in the annual budget rather than focusing on making proper use of funds allocated to them at the start of this fiscal year.

As of yesterday, total government expenditure stood at Rs 255.4 billion, which is 18.8 per cent of the total allocation of Rs 1,360.7 billion for the current fiscal year. The government's capital expenditure during that period was even worse, standing at Rs 30.1 billion, or 8.4 per cent of the total allocation of Rs 359.6 billion for 2018-19.

Against this backdrop of weak expenditure, demands for additional funds for projects and programmes not included in the budget are not justified, said Krishna Prasad Dahal, chairman of the committee. “Ministries should stop seeking financial assistance for off-budget programmes unless they are highly necessary,” he said.

Various ministries had demanded almost Rs 50 billion for off-budget programmes in the first four months of 2018-19, according to the Ministry of Finance.

“The ministries should focus more on increasing capital spending rather than demanding funds to finance off-budget programmes,” former finance minister and lawmaker Surendra Pandey told the committee meeting.

Low capital spending has been crippling the country for long, slowing down the pace of construction of various physical infrastructure that are crucial to foster economic growth. The parliamentary committee today directed all ministries to submit work plans to ramp up capital expenditure.

One of the reasons for low capital spending this year, according to ministries, is delay in construction of multi-year projects handed over by the federal government to provincial governments. The federal government has said many provincial governments have not been able to implement those projects.

The parliamentary committee today directed federal ministries to provide adequate financial resources to projects that have been handed over to provinces. The committee has also sought details of projects whose liabilities have been transferred to provincial and local governments along with parameters that were followed while doing so. The committee has also sought details of projects that are not moving ahead.