Staff adjustment, law making lead to low capital expenditure

Kathmandu, June 28

With less than three weeks remaining to end the current fiscal year 2018/19, the government has just utilised about 53 per cent of the capital budget.

Finance Minister Dr. Yuba Raj Khatiwada had allocated Rs. 314 billion for the development works, of which only Rs. 165 billion is used till Thursday.

The utilisation of development budget  has come as a despair as the people had expected that political stability and implementation of federalism would give the much needd impeutus to the development work and the country would see surge in expenditure which would have positive impact in the economic growth.

The Ministry of Finance (MoF) expects to spend about 80-85 per cent of the revised capital budget in the next two weeks. It puts the budget utilisation at par the previous years.

In the mid-term review of the budget of the current fiscal, FM Dr. Khatiwada had lowered the target of the capital budget to Rs. 265.26 billion – 15 per cent less than the size announced in the budget.

“As per the ministry estimates, capital expenditure would meet 85 per cent target of the revised budget. Many contractors have completed thir work at the sites but are yet to submit the bills to claim the money,” said Uttar Kumar Khatri, spokespoerson at the MoF.

He said that the confusion in implementation of the projects handed down to the subnational governments delayed the development progress. Similarly, the provincial and local governement could not begin the process of project execution in absense of civil servants.

“Delay in the adjustment of civil servants in the provincial and local bodies has badly affected the project execution. The subnational governments couln’t begin the bidding process in time while some of the projects returned to the federal government months after the beginnig of the fiscal year,” said Khatri.

The Finance Ministry also said that since the major focus of all the governments was in formulating laws and policies as dircted by the constitution, project implementation got less attention.

But Economist and former Vice-Chairman of the National Plannign Commission, Dr. Shankar Sharma said that the utilisation of capital budget had become a recurrent problem for many years due to the practice of including developmetn projects in the budget witout preparing their feasibility study or Detailed Project Report (DPR).

“Poor project preparation has resulted in poor execution, and the practice of low-bidding has amplified the problem. The contractors bid the project at the amount which is not sufficient to develop the project so they just take the mobilisation money (20 per cent of the project) and never begin the work,” he said.

Failure in timely approval of the district level projects, poor inter-ministry coordination and hurdles in land acquisiton are the other factors behind the problem, said Dr. Sharma.

According to him, better project preparedness, strong monitoring of the developent projects, timely disbursement of the budget and effective inter-ministry and inter-governmental coordination can breed good results.

Meanwhile, bills from the contractors worth Rs. 65 billion are stuck at various government agencies for payment which puts the real utilisation of budget at 87 per cent, well above the Finance Ministry estimation as per the revised size of the budget.

According to the daily budgetary statistics of the Office of the Comptroller General (OAG), the recurrent expentiture stands at 76 per cent and financing at 45 per cent by Thursday.

Published in The Rising Nepal daily on 29 June 2019.