Nepal | June 17, 2019

Nepal likely to have Rs 300 bn budget surplus

Pushpa Raj Acharya
Deputy Prime Minister and Finance Minister Krishna Bahadur Mahara

File – Deputy Prime Minister and Finance Minister Krishna Bahadur Mahara, in Kathnmandu, on Sunday, December 12, 2016. Photo: Balkrishna Thapa Chhetri

Kathmandu, January 31

The mid-term budget review this year had nothing to show other than officials of the implementing agencies attempting to justify delay in implementation of big ticket projects with generic excuses like lack of project readiness, delay in procurement process, multi-layers of sub-contractors and local hassles.

The officials cited these reasons for slow capital spending — merely 11.3 per cent of the total allocation worth Rs 311.95 billion — in the first half of fiscal 2016-17. According to Vice Chairman of the National Planning Commission Min Bahadur Shrestha, the country will have a budget surplus of around Rs 300 billion by the end of this fiscal if the development projects move at the same pace in the second half. “It is quite paradoxical for an underdeveloped country like us to have a surplus budget,” he said.

According to NPC member Swarnim Wagle, the slow development expenditure is due to ‘inefficiency’ of the ministries that mobilise a large chunk of the capital budget.

For instance, a recent meeting of the National Development Action Committee — the prime minister-led mechanism to resolve hassles in implementation of development projects — had instructed the line agencies to finalise modalities of some crucial projects, such as Budhigandaki Hydropower Project and Kathmandu-Tarai Fast Track Road Project within a month.

“The deadline expires today, but there has been no progress on this front,” Wagle said, adding, “If tasks were concluded within the given time, 80 per cent of the capital budget could be spent this fiscal.”

In a clear display of sorry state of affairs, nobody from the Ministry of Physical Infrastructure and Transport, which is responsible for developing the modalities of aforementioned projects, was present during the meeting. MoPIT holds the largest chunk of development budget of Rs 72.68 billion for this fiscal and only around 17 per cent of the total allocation had been spent in the first half.

Moreover, performance of some national pride projects was nil in the first half of the fiscal — a case in point being the Second International Airport in Nijgadh, which has been allocated Rs 1.5 billion.

Budget allocation in a haphazard manner without considering the project readiness was also identified as one of the biggest challenges. The government has allocated Rs 10 billion for the Kathmandu-Tarai Fast Track Project, but the implementation modalities of the project are yet to be finalised. This means the allocated fund is unlikely to be spent.

Slow capital spending is a deep-rooted problem that retards economic growth, escalates cost of the projects and prevents beneficiaries from reaping benefits from the project.

To expedite government spending, Deputy Prime Minister and Finance Minister Krishna Bahadur Mahara instructed transferring the funds allocated to bad performers to good performing projects starting mid-March, as announced earlier. He also asked the Budget Division of the MoF and NPC to facilitate project implementation.

Envoys express concern

KATHMANDU: The diplomatic community has expressed concern about snail-paced capital spending at a time when the government is touting higher economic growth in the current fiscal.

Minister for Foreign Affairs Prakash Sharan Mahat briefs about Nepal's participation in BRICS-BIMSTEC Outreach Summit

File – Minister for Foreign Affairs Prakash Sharan Mahat briefing journalists about Nepal’s participation in the BRICS-BIMSTEC Outreach Summit in Goa of India, in Singha Durbar, Kathmandu, on Friday, October 14, 2016. Photo: RSS

During a diplomatic briefing, some envoys, including Australian Ambassador Glenn White, also cautioned that slow spending of development budget may affect the post-earthquake reconstruction endeavours, according to a foreign ministry official who was present during the briefing. Minister for Foreign Affairs Prakash Sharan Mahat had briefed the envoys about the latest political development at the Ministry of Foreign Affairs on Tuesday. Ambassadors and heads of mission of all Kathmandu-based foreign diplomatic missions, including ambassadors of India, China, USA, UK, Japan, as well as multilateral missions of the United Nations and European Union were present during the briefing.

In his response, Mahat said the government would soon expedite capital spending as the government was all set to allot the second instalment of the housing grant to the quake-affected households soon. “We are going to spend the amount that our donors contribute and also expedite pouring in our own capital for reconstruction work,” Mahat said.

A version of this article appears in print on February 01, 2017 of The Himalayan Times.

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