‘We will be able to forge consensus to bring supplementary budget’

The government has been preparing to bring a supplementary budget to bridge the resource gap that it faces as it has increased the grant assistance for rebuilding of individual houses in quake-hit districts from the initial Rs 200,000 to Rs 300,000.  The government of the ruling party, Communist Party of Nepal (Maoist-Centre), has been seeking political consensus for the supplementary budget and efforts for the same are still on. Pushpa Raj Acharya of The Himalayan Times caught up with Deputy Prime Minister and Finance Minister Krishna Bahadur Mahara to know about the preparations of the supplementary budget and what the finance ministry has been doing for effective implementation of the fiscal budget 2016-17 because only around Rs 20 billion of the total allocation of the development budget worth Rs 311.95 billion has been spent in the first quadrimester of this fiscal.

Excerpts:

The government has been talking about bringing supplementary budget since the formation of the new government but it has not materialised till date. What are the preparations being made in this regard?

Preparations to bring a supplementary budget are moving ahead and we have started discussions with the leadership of various political parties including the coalition partners. The government can bring the supplementary budget as per the provision of the Constitution. As per the provision, the government can bring a supplementary budget when it has to spend more funds than allowed by the Appropriation Act. As the new government has announced to raise the grant amount to the quake survivors by an additional Rs 100,000 to Rs 300,000 to rebuild their houses, it has increased the liability of the government by around Rs 80 billion. Besides this, we require additional resources to restructure the local bodies and implement the federal structure. We also require additional funds as Prime Minister Pushpa Kamal Dahal had announced some new programmes while addressing the nation from the Parliament on September 8, which include the rescue and compensation for migrant workers who have lost jobs, are stranded or been physically injured in labour destinations, among others.

Do you believe that the ruling party, Communist Party of Nepal (Maoist-Centre), will be able to forge consensus with other political parties?

Initial discussions have started and we have presented the rationale behind the supplementary budget. We will try to take consent from the major political parties till the last moment before submitting the supplementary budget to the Parliament. And I firmly believe that we will be able to forge consensus to bring the supplementary budget.

What will be the tentative size of the supplementary budget?

As we have to spend Rs 80 billion as grant for individual house rebuilding, the government has been mulling over to bring a supplementary budget of Rs 100 billion. We do not have resource constraints to bring supplementary budget because we have enough resources that have remained unspent in the last fiscal and revenue collection in this fiscal has also risen exponentially in the first four months exceeding the collection target.

The government has been preparing to distribute second tranche of the government’s aid worth Rs 150,000 to the beneficiaries who have started rebuilding houses. The process will be stalled if the government is unable to bring supplementary budget. What do you have to say on this? 

The process will not be stalled because the Ministry of Finance (MoF) recently released an additional Rs 33 billion to the National Reconstruction Authority (NRA) for this purpose and the distribution of the second tranche will start in the near future. We do not require all the money at the same point of time because the second tranche will be started gradually as the rebuilding of individual houses has just started and to receive second instalment they must have met the criteria set by NRA. However, as more houses start getting rebuilt we will need more resources than allocated in fiscal budget 2016-17 to distribute the second tranche. In addition, the government has also been mulling over to announce a certain amount of grant for the maintenance of houses affected by the earthquake to make them good enough to live in. Similarly, we require additional resources than allocated in the budget of this fiscal if reconstruction of other quake-ravaged structures including schools, government buildings and heritage sites gathers momentum and we are optimistic as reconstruction works are gathering pace.

How long will it take to table supplementary budget in the Parliament?

The supplementary budget will take a concrete shape after we are able to forge a political consensus on it. We are preparing to bring it after the finalisation of two crucial issues, one of which has already entered the businesses of the Parliament — Constitution amendment bill — and another one is a report on local bodies restructuring by the Local Body Restructuring Commission.

The MoF is still clueless about when it will be able to bring supplementary budget. Why are you still stuck with the supplementary budget as preparations for next fiscal year’s budget will soon start?

The supplementary budget will not hamper the preparations for next fiscal year’s budget. Supplementary budget will be formulated within a week once the political parties have been convinced on the rationale behind the supplementary budget.

The government has beencriticised by opposition parties for its delay in implementing the budget. What do you have to say on this?

The government’s expenditure in the first quadrimester was slow and some concerns being raised are valid but it is not true that we do not have any interest for the effective implementation of budget 2016-17. We are committed for the effective implementation of the budget and we have already held discussions with line ministries and agencies who have been allocated a large chunk of capital expenditure to expedite development works. Normally, the government’s spending accelerates from the second quadrimester because the executing agencies of the development projects finalise procurement processes and other related procedures during the first quadrimester and spending of the government increases with physical progress of the projects as payments are released to the contractors. To ensure the effective utilisation of allocated resources we have urged the executing agencies to complete the bidding (procurement) process before the second quadrimester is over. They have to surrender the funds if they fail to start works within the second quadrimester because there is a trend to start bidding process in the last quadrimester and spend funds at the last moment of the fiscal year. Due to this there is a higher chance of misuse of funds and delivery of substandard works.

The previous government had brought the budget one-and-a-half months prior to the start of the current fiscal year in a bid to ramp up slow capital expenditure witnessed in previous years, which is caused by the delay in budget approval from Parliament, then delay in programme approval by National Planning Commission (NPC). It is reported that NPC has been delaying in approving the programmes and as a result line ministries have not been able to authorise line agencies to spend the allocated budget. What has the finance ministry been doing to ramp up capital expenditure?

We have already discussed with NPC and urged it to expedite the programme approval process and line ministries have also been asked to authorise line agencies to spend the budget as soon as possible so programmes can be implemented faster. From next fiscal, we will remove the provision to get NPC’s approval, which will shorten one layer and ministries can authorise line agencies to spend allocated budget as per their procurement plan submitted to the NPC and finance ministry during budget formulation process after the budget is endorsed from the Parliament. To accelerate expenditure, the MoF has intensified monitoring of line ministries and also has started facilitating them. Ministries who are mobilising higher amount of development budget are responsible for the slow capital expenditure and we have to make them more responsible because time and cost over-run of development projects are mainly due to inefficiency of the executing agencies.