Nepal | May 25, 2020

Reckless expenses up: OAG report

Pushpa Raj Acharya
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Kathmandu, April 12

Government offices, local level administration and constitutional bodies have recklessly spent Rs 120 billion in the previous fiscal, out of the total audited amount (expenses) worth Rs 2,145 billion.

Presenting its 55th report to the president, Office of the Auditor General — the external auditor of the government — said the cumulative arrears had gone up to Rs 500.08 billion till fiscal 2016-17.

In its report, the OAG has said that the local level administration was unable to justify expenses worth Rs 14.25 billion in the last fiscal, which was 7.9 per cent of their total audited amount of Rs 180 billion. The arrears of the district development committees stood at Rs 12 billion, out of total audited amount of Rs 212 billion.

For comparison, the arrears in fiscal 2014-15 were 4.68 per cent of the audited amount worth Rs 1,043.24 billion; 6.86 per cent of the audited amount worth Rs 1,295.45 billion in fiscal 2015-16 and 5.41 per cent of the total audited amount worth Rs 1,752.92 billion in fiscal 2016-17, according to the OAG report.

As per the OAG, among the ministries, the Ministry of Finance has to settle high amount of arrears worth Rs 9.39 billion. The arrears include the capital gains tax supposed to be paid by the telecommunication service provider Ncell and revenue loss mainly due to lack of tax enforcement.

The OAG report has stated that the MoF, through the Financial Act, provided revenue exemption worth Rs 59.20 billion in fiscal 2016-17 to various sectors — services, construction, industry, among others — to protect domestic industries, encourage formal trade, promote exports and facilitate infrastructure development. Such exemption in 2015-16 stood at Rs 51.31 billion.

The OAG has said that MoF has failed to heed the recommendation of the previous OAG report and High Level Tax System Review Commission. The HLTSRC had recommended withdrawing exemption of value-added tax from certain products like ghee, edible oil and cellphones. Still, the government granted exemption worth Rs 6.12 billion to the said products in the last fiscal.

OAG also found the Election Commission making rampant expenses in the wake of the local level elections, which resulted in the EC accumulating highest arrears among the constitutional bodies in the last fiscal.

Out of the Rs 5.19 billion audited under the expenses of the EC in the last fiscal, the constitutional body has to settle arrears worth Rs 191.6 million. The commission claims to have paid much higher than the market price for sample ballot papers, paid twice for the same bill of meals and not deducted the tax at source while making payments, as per the OAG report.

The report adds that the debt burden on each Nepali went up by Rs 2,147.37 to reach Rs 24,276.75 by fiscal 2016-17, as the country’s foreign debt stood at Rs 697.69 billion, which was 26.84 per cent of the gross domestic product of the last fiscal.

The OAG report has also highlighted loss of capital gains tax during transactions in realty sector, as owners undervalue their property. It has also flagged high land compensation released to those affected by Budhigandaki Hydropower Project and Gautam Buddha International Airport. The Budhigandaki Hydropower Project released additional Rs 62 million on top of the compensation amount fixed by the Land Compensation Fixation Committee. Similarly, the GBIA raised the land compensation amount up to eight folds from the average land compensation amount fixed by the Land Compensation Committee. “All this escalated the cost of the projects considerably.”


A version of this article appears in print on April 13, 2018 of The Himalayan Times.

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