Capital budget spending stuck at 12.2%

Kathmandu, Jan. 5

As the first half of the current Fiscal Year 2020/21 draws to a close, government capital spending has recorded a slight improvement amidst the fear of coronavirus pandemic but it has failed to touch the mark of the previous year.

In the past five and a half months, capital spending stood at 12.19 per cent – with the utilisation of Rs. 43.01 billion out of the total Rs. 352.9 billion. The progress in the same period last fiscal 2019/20 was 11.75 per cent but the amount mobilised was Rs. 47.9 billion, according to the Financial Comptroller General Office (FCGO).

The size of capital budget this year (Rs. 352.9 billion) is smaller than the last year’s Rs. 408 billion.

However, the total expenditure including recurrent and financing provision has gone up this year to 25.81 per cent against last year’s 22.69 per cent. Recurrent expenditure in the first five and a half months this year is Rs. 317.9 billion which was Rs. 283.8 billion last year.

Nevertheless, development budget expenditure has improved significantly in the last three months. The government was able to spend only Rs. 9.89 billion – just 2.8 per cent - in the first two and a half months of this year.

With the current rate of budget spending, the economic growth target of 7 per cent is difficult to achieve. While the World Bank has challenged the government-set growth target and said the country’s economy would expand by only 0.6 per cent – a slight improvement from last year’s 0.2 per cent, the government has not revised the target that was set in the budget presented in the Parliament in July end last year when the country was under strict lockdown.

As the development work and businesses began to catch momentum with the beginning of the new fiscal year in mid-July last year, there were hopes that budget spending would be impressive. However, the latest statistics tell otherwise.

The FCGO on Sunday expressed a serious concern over the poor status of capital budget spending and suggested mobilising the available tools, equipment and human resources to the maximum to improve spending.

It had directed the development agencies under the government in the districts across the country to immediately initiate programmes and activities to enhance spending.

Meanwhile, the FCGO stated that the economy would gain pace in the second half of the year as the demands were going up and business activities had improved.

According to the Nepal Rastra Bank, the number of industries running in their full capacity has increased to 57 per cent in December 2020 from a meagre 6 per cent in May.

Published in The Rising Nepal daily on 6 January 2021.