Capital expenditure target gets another slash

Kathmandu, July 11

Only 70 per cent of the capital budget will be utilised in the current fiscal year 2018/19, said the Ministry of Finance (MoF).

The government has failed to make any positive impact on the use of the development budget this year despite its claims that the large infrastructure projects witnessed a significant progress this year.

The new target is another 15 per cent down from the revised estimates of the budget.

Finance Minister Dr. Yuba Raj Khatiwada had revised his own budget during the mid-term review and lowered the target to 85 per cent of the total capital expenditure of Rs. 313.99 billion.

According to the revised estimates, the utilisation of capital budget should be 265.26 billion by July 16, the last day of the current fiscal.

With only five working days of the fiscal year remaining, the capital expenditure stands at about 59 per cent.

In monetary terms it is Rs. 189.64 billion.

According to the Financial Comptroller General Office (FCGO)'s daily budgetary status report, the government had utilised 53 per cent of the total capital budget two weeks ago. It means the daily expenditure was about Rs. 1.25 billion in that period.

But the government had to spend about Rs. 15.12 billion a day to meet its revised target for the capital budget. Experts say that this is an impossible proposition.

Spokesperson of the MoF Utttar Kumar Khatri said that the expenditure might be near around the revised target of the budget since the ministry is making payments of Rs. 10 billion to Rs. 14 billion per day in the last 3-4 days.

"The trend in the past 3-4 days is encouraging," he said.

He said that the formulation of law as per the Constitution, confusion in project transfer to the provincial and local level and delay in adjustment of the civil servants as per the state restructuring affected the development works across the country.

The inability to spend the capital budget will have negative impact on the growth prospect of the economy.

"Capital expenditure is the growth driver of any economy, the more you utilise it, the better the economy would be," said Economist Dr. Posh Raj Pandey.

He said that the poor use of budget was the inefficiency in the part of both the government and the private sector. "Many projects announced in the budget or included as the multi-year programmes are poorly planned. There are weaknesses in every stage of the project development from the preparedness, procurement to execution," said Dr. Pandey. "At the same time, the private sector should also be blame for the poor project performance since it is the one that develops the projects."

The MoF said that the total budget utilisation would cross 85 per cent limit with the support of the recurrent expenditure.

According to the FCGO report, the recurrent expenditure stands at 81 per cent and financing provision at about 62 per cent.

Published in The Rising Nepal daily on 12 July 2019.