Capital spending stands at 31 per cent, Rs. 30 billion payment due to contractors

 Kathmandu, May 10

With only 64 days remaining before the current fiscal year 2021/22 comes to an end, the federal government has been able to utilise only 31 per cent of the capital budget.

Of the total capital allocation of Rs. 378 billion, Rs. 117.1 billion is spent till Monday, according to the daily receipts and payments status report of the Financial Comptroller General Office (FCGO).

As per general calculations, the government has to spend about Rs. 4.07 billion a day to mobilise the unspent Rs. 260.9 billion capital budget.

This is less than the expenditure made in the same period of the last fiscal year 2020/21 when about Rs. 122.1 billion – about 34.6 per cent of the total allocation – was utilised.

Meanwhile, the local election and 'construction holiday' are certainly having their toll on the expenses. Construction entrepreneurs have announced construction holiday and halted all development works across the country citing the increase in the price of construction materials. It has affected about 3,700 ongoing construction projects of Rs. 600 billion investment.

President of Federation of Contractors' Association of Nepal (FCAN), Rabi Singh, said that the holiday would continue until the government addressed their demands.

Meanwhile, of the financing budget of Rs. 189.4 billion, only 38.91 per cent is spent. The financing budget is used to repay the principal and interest of the loan obtained by the government and to make investment.

Finance Minister Janardan Sharma had announced a plan to spend 10 per cent of the development budget each month after the festival season in October last year but the development ministries have largely failed to execute the programmes they planned which has hit the expenditure.

FM Sharma has also been holding multiple meetings with the stakeholders including the ministries and private sector to facilitate smooth progress in development work. However, this effort has not yielded any results so far.

Singh said that there was poor coordination between the Ministry of Finance (MoF) and development ministries that execute large projects in infrastructure sector. "The ministries that can't spend the money are holding a large amount of budget. They should exhibit promptness in mobilising the budget," he said.

According to him, the government has the liability of about Rs. 30 billion to the private contractors.

Finance Secretary Madhu Kumar Marasini pointed at the inherent structural problems in the process and system. "We are trying to facilitate the swift mobilisation of the budget," he said.

However, total revenue collection of the government has continuously remained above the total expenditures. By Monday, Rs. 914.9 billion revenue is collected and Rs. 903.2 billion spent. Recurrent expenditure is 66.88 per cent of the Rs. 1065.2 billion allocation.

It is also said that large part of the budget earmarked Rs. 387.30 (23.72 per cent) for intergovernmental fiscal transfer to the provinces and local levels is for development work. So, the actual expenditure could be higher than what FCGO report showed.

Through the replacement bill, FM Sharma had allocated Rs. 677.99 billion (41.52 per cent) for recurrent expenditure, Rs. 378.10 billion (23.16 per cent) for capital expenditure and Rs. 189.44 billion (11.6 per cent) for fiscal arrangement.

Published in The Rising Nepal daily on 11 May 2022.