Arrears pile up to Rs. 484 billion

Kathmandu, July 13

The Office of the Auditor General (OAG) has painted a grim picture of fiscal indiscipline and lack of accountability.

Status of fiscal accountability is not encouraging while internal control system, adherence to fiscal procedures and implementation of audit report is weak which has weakened the economic good governance, the OAG said in its 59^th annual report made public on Wednesday.

The report has concluded that repetition of financial misappropriations of the same nature has become the feature of fiscal management in the country, and weak fiscal discipline has obstructed the reform in fiscal administration. The constitutional body has submitted the report to President Bidya Devi Bhandari on Wednesday. Auditor General Tankamani Sharma Dangal submitted the report to the President.

Total arrears have gone up by 15.46 per cent in the Fiscal Year 2020/21 against the previous year 2019/20. After auditing of 5,665 agencies, the OAC found total arrears of Rs. 115.05 billion last year while only Rs. 4.21 billion was recovered that year. But total arrears by the end of the last fiscal have reached Rs. 483.6 billion. Likewise, Rs. 345.56 billion needs to be cleared by updating the details of transactions and payments.

The two combined make Rs. 829.16 billion to be cleared and recovered.

Government committees and other organisations have performed the worst in terms of fiscal discipline. They have 6.89 per cent arrears of the total audited amount of Rs. 206.12 billion. Among the various levels of governments, local governments have the highest per centage in arrears. Of the audited Rs. 1051.1 billion of the local governments, about Rs. 43.91 per cent is arrear which is 4.19 per cent.

Similarly, provincial governments combined have Rs. 7.48 billion in arrears which is 2.5 per cent of the audited amount Rs. 299.57. However, the federal government has arrears of Rs. 49.47 billion, highest in terms of amount. The federal arrears amount 1.75 per cent of the audited amount Rs. 2820.38 billion.

 Arrears details

Agencies	Audit (Rs. in billions)	Arrears (Rs. in billions)	Percentage
Federal	2820.38	49.47	1.75
Provincial	299.57	7.48	2.5
Local	1051.1	43.91	4.18
Others	206.12	14.19	6.89
Total	4377.17	115.05	2.63

Source: 59^th Report of the OAG

Meanwhile, the OAG noted that the federal government agencies have the lowest arrears in the last three years. In 2019/20 and 2018/19, arrears made about 2.85 per cent and 4.08 per cent of the audited amount.

However, the provincial arrears have gone up to 2.5 per cent last year from 2.47 per cent of the previous year. Local governments arrears went down to 4.18 per cent last year from 5 per cent of the previous year.

Communication ministry has highest arrears

Among the federal ministries, Ministry of Communication and Information has the highest per cent of arrears with 25.18 per cent of the Rs. 15.38 billion, followed by the Ministry of Agriculture and Livestock Development which has 15.53 per cent arrears of Rs. 22.08 billion.

Other agencies having high arrears include Ministry of Industry, Commerce and Supplies with 12.71 per cent, Ministry of Physical Infrastructure and Transport 4.61 per cent, Ministry of Education, Science and Technology 4.25 per cent, Ministry of Land Management, Cooperatives and Poverty Alleviation 3.96 per cent, and Ministry of Health and Population 3.35 per cent, informed the OAG.

Lack of harmony in planning and budgeting

In the report, the OAG has noted that there was lack of harmony between planning, programmes and annual government budget, poor budget discipline while transferring the budget at the end of the year, and poor utilisation of foreign aid.

Likewise, it said that not all the foreign supports were included in the budget and undergone through audit system while national budget was spent out of the national budgetary system.

 In terms of the implementation of federalization, the country couldn't control the unproductive expenses, provinces and local governments were largely dependent on the federal grants, and there was duplication and lack of coordination among the various levels of governments in terms of the development programmes.

The OAG has suggested for strong monitoring of the budget execution by the concerned agencies, holding the authorities responsible for their misappropriation of the public funds, connecting fiscal discipline with the performance evaluation and adopting stick and carrot policy for adherence to the fiscal discipline. 

Published in The Rising Nepal on 14 July 2022.