Kathmandu, May 28
The country is set to receive the budget
for the next Fiscal Year 2022/23 on Sunday amidst a dismal performance of
capital and recurrent allocations in the current FY 2021/22.
As the major ministries mobilising the
capital allocations for the development and infrastructure projects across the
country fared poorly, the federal government could spend only 33.12 per cent of
the Rs. 378 billion capital budget by Friday. It means, only Rs. 125.2 billion
is disbursed from the Financial Comptroller General Office till the other day.
The capital expenditure so far this year is
less against the same period of the previous year with 37.6 per cent
mobilisation of development allocation.
Although the size of the budget has been
significantly increased for the current fiscal year – from Rs. 1474.6 billion
of 2020/21 to Rs. 1632.8 billion in 2021/22 – and COVID-19 pandemic is largely
under control with a brief rise in the cases in January, the government at all
levels performed poorly in budget mobilisation.
However, the recurrent expenses are
identical with 70.7 per cent this year and 69.08 per cent last year. As per the
current expenditure indicators, there are less chances for optimum utilisation
of the budget.
Sensing this scenario, Minister for Finance, Janardan Sharma 'Prabhakar', has adjusted the size of the budget to
Rs. 1546.2 billion, 94.7 per cent of the total, in the mid-term review of the
budget. Likewise, recurrent expenditure is reduced to Rs. 1035.4 billion,
capital to Rs. 340.3 billion and financing to Rs. 170.5 billion.
Even according to the budget adjustment,
the government is under the pressure of spending the remaining 215.1 billion in
the remaining 48 days of the current fiscal year which means about Rs. 4.48
billion should be used up in a day.
Meanwhile, the growing prices of steel and
other construction materials in the wake of the Russia-Ukraine war had resulted
in the contractors' demand to review the tender agreements to adjust the price.
As per the rule, the government cannot spend more than 20 per cent of the total
capital allocation in the final months of the fiscal year. It means the capital
budget would still remain unused even after the adjustment.
Underspending becomes a trend
This is not just a sporadic occurrence, it
has become a trend in the country for the past many years. For example, Finance
Minister Bishnu Prasad Paudel had downscaled the budget by 14.1 per cent while
capital expenditure was reduced by 14.8 per cent in the last FY 202021. That
year size of original budget was Rs. 1474.6 billion and capital allocation was
Rs. 3529.1 billion.
Likewise, citing the impact of the
coronavirus on the economy and development activities, FM Dr. Yuba Raj
Khatiwada in FY 2019/20 had reduced the size of budget in the mid-term review.
The revised government expenditure for that
year was expected to be at Rs. 1073.3 billion, which was 70 per cent of the
total allocation Rs. 1532.9 billion while capital expenditure stood at 58.6 per
cent of about Rs. 408.6 billion.
Similarly, in the year before the COVID-19
hit the country, FY 2018/19, the Finance Ministry had reduced the size of the
budget to Rs. 1208.3 billion, which was 91.8 per cent of the total allocation. The
capital budget was also adjusted to 86.9 per cent.
Provinces fail
to perform
Contrary to the earlier expectations that
the creation of the subnational bodies would help in better execution of the
budget and utilisation of resources, the provinces have failed to spend the
budget allocated to them.
According to the Nepal Rastra Bank (NRB),
in the nine months of this year, total resource mobilization of provincial
governments remained at Rs. 125.53 billion. The federal government had transferred
Rs. 90.04 billion as grants and revenue from federal divisible fund to
provincial governments and the provincial governments mobilized Rs. 35.48
billion in terms of revenue and other receipts in the review period.
However, the total expenditure of
provincial governments by mid-April stood at Rs. 80.62 billion, said the NRB.
But the federal government had earmarked Rs. 387.3 billion (23.72 per cent) for
intergovernmental transfer to the provinces and local levels. Better
utilisation of this budget could result in better project execution.
In the last fiscal year 2020/21, Bagmati
and Sudurpaschim provinces expected to spend 74 per cent and 72.6 per cent of
their budget. The expectations were announced on the basis of nine months'
statistics of budget utilistaion. However, Karnali and Province 1 said that
they would utilise only 46.4 per cent and 60 per cent of their budget,
respectively.
Poor HR and project management
Former Finance Secretary, Remeshwore Khanal,
said that the reasons behind the failure to implement development projects are
poor human resource and project management, lack of project preparedness and
budget allocation to the projects that can't utilise it. For the past many
years, the government allocated budget in billions for the international
airport project in Nijgadh but most of the budget was surrendered by the end of
the year.
"Until the trend to change project
managers with the change in the ministerial leadership, and installation of henchmen
at the projects, this trend of budget underutilisation will not be
improved," he said.
According to him, political 'bhagbanda' in
the appointment of the project managers and budget allocation at the whim of
leaders have been the major challenges to the development work.
To improve the budget expenditure, the
budget is announced about one-and-a-half months before the beginning of the
fiscal year, and the provision to seek approval from the MoF is removed, and
ministries and line agencies can start spending from the first day of the new
fiscal year. But the situation has remained intact.
New policy to use the budget
FM Sharma had announced to spend 10 per
cent of the capital budget each month after October last year but it fell into
the deaf ears. He had also initiated multiple discussions with the line
ministries, provinces and other stakeholders to make improvements in the
utilisation of the budget.
FM Sharma has pledged to enact new policies
for better execution of the budget of the upcoming year 2022/23. In the Policy
and Programmes of the government for the next fiscal year, he said to enhance
allocation efficiency and institutional capacity, and maintain fiscal
discipline.
Likewise, he had said that budget wouldn't
be earmarked for the projects that are not technically and economically
feasible.
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