Nepal | April 20, 2019

EDITORIAL: Value for money

The Himalayan Times

The newly-formed public spending review panel must recommend ways to make public financial management system efficient 

The government has been increasing taxes every year to enhance its spending capacity. In the last five years, the size of government’s annual budget has more than doubled from Rs 618.1 billion (in 2014-15) to Rs 1,315.2 billion (in 2018-19). But is taxpayers’ money being utilised efficiently? General people often cast doubts about the efficient and effective use of public financial resources considering the quality of goods and services provided by the government. It is high time the government did something to change this public perception. Otherwise, it might find it difficult to justify its move to increase taxes every year. A large chunk of taxes raised from the public goes towards recurrent spending. In this fiscal, over 60 per cent of the annual budget has been allocated for recurrent spending. This means a big portion of the budget is being used to pay salaries to government staff and cover other administrative costs. Of course, the size of the capital budget has also swelled over the years. But this budget is never fully utilised, hitting construction of physical infrastructure, which can crowd in private investment and spur economic growth. Worse, capital spending gathers pace towards the end of fiscal year, leading to the haphazard construction of physical infrastructure, which increases government’s cost of repairs and maintenance.

Considering these inherent weaknesses of the public financial management system, the government yesterday formed a public expenditure review commission under senior economist Dilli Raj Khanal. The Cabinet meeting formed the commission to provide recommendations to the government to raise the effectiveness of public expenditure at federal, provincial and local levels. The commission will look into the flaws of the overall budget system — budget formulation, resources allocation, project preparedness, selection and execution, and timely accounting and reporting. It will then recommend ways to utilise public funds in an effective and efficient manner. This is a welcome step because subnational governments, which were formed after Nepal’s shift from unitary to the federal system of government, do not have experience in generating their own financial resources and utilising those resources in areas that can deliver maximum results. As a result, most of the local governments have been found adding the tax burden on the public, without providing quality goods and services.

This is not the first time the government has formed a public expenditure review commission. The first commission formed around 18 years ago had helped the government bring down the number of identical government projects from around 700 to 450 through mergers and introduce the concept of the service contract. These suggestions later helped the government reduce spending. The newly-formed commission should also recommend ways to reduce unnecessary spending, help identify new revenue sources and provide tips to allocate scarce resources efficiently so that value for money is ensured. The government, in turn, should take the recommendations made by the commission seriously and implement them.  This can help the government to meet its target of achieving high growth rates and share prosperity.


Saving lives

The 10th World Humanitarian Day was marked on Sunday to highlight the importance of humanitarian workers across the globe. Humanitarian workers are the backbone of every life-saving response. Dr Poonam Khetrapal Singh, WHO regional director for South-East Asia, has said, though the role of humanitarian workers is straightforward the situations they must operate in are far from it. All humanitarian workers who help people in dire needs require special skill sets and a deep well of fortitude. Many of them are also health workers.

Khetrapal has also stressed on the need to “enhance the preparedness of health workers at all levels to respond to domestic crises”. Effective utilization of information and communication is the key to address plights of the people in crises. They also need effective and financial support to help the people suffering from natural disaster, disease outbreak and war. Strong primary health systems must be developed by all nations to deal with humanitarian crises. Since the attack on Canal Hotel, Baghdad, 15 years ago, more than 4,000 humanitarian workers have been killed and over 26,000 civilians killed or injured.

 


A version of this article appears in print on August 21, 2018 of The Himalayan Times.


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