Kathmandu, May 2

Though a large chunk of the grant transferred to the sub-national governments remains unspent, the Central Bureau of Statistics has included the grant amount transferred to the lower layers of administration as funds mobilised while calculating the gross domestic product forecast.

The local bodies had not spent Rs 93 billion before the transfer of the last tranche in mid-March. However, the grant transfer to the sub-national governments is considered as expenditure for the central treasury. Before the federal set-up, the central government used to disburse money based on the expenses of lower level governments.

CBS officials admitted that they had calculated the grant amount transferred to sub-national governments as expenses of the government.

“Due to lack of effective reporting system from the sub-national governments, it is difficult to get the exact figure of expenses at the lower levels of administration and we have included the conditional grant that must be spent on education and health as funds that have been mobilised while calculating the GDP growth,” said Ishwari Prasad Bhandari, director of CBS.

CBS officials said the money spent on elections and for salaries and allowances by National Reconstruction Authority for engineers at the local levels also helped to retain high growth this fiscal under public administration and defence classification.

Economists said the CBS could not make growth forecast based on expenses from the central treasury in the federal system. They added that the money that remained unspent in the treasury of the sub-national governments had to be separated while calculating the GDP growth.

The Ministry of Finance in the half-yearly review of the budget stated that around Rs 93 billion had remained unspent in the local bodies. The CBS should have deducted this amount for a more reliable forecast of GDP, say economists.

Sources at the CBS said they were pressured by the MoF to present a forecast closer to the estimation of the ministry. In the half-yearly review, the finance ministry had revised the growth estimation to six per cent from the initial forecast of 7.2 per cent.

If CBS was allowed to forecast independently without undue pressure from the MoF, it might have forecast a growth of around 5.5 per cent, according to CBS sources.

However, CBS made a growth forecast of 5.89 per cent.