Capital spending below median mark

Kathmandu, July 9

Government capital spending has remained the worst this year compared to the past several years except the period of the coronavirus pandemic in 2020 and 2021.

Total mobilisation of the capital allocation for the current fiscal year 2021/22 has reached just 46.22 per cent by Friday, according to the report of the Financial Comptroller General Office (FCGO). The number is about 8 per cent less than the development spending in the last FY 2020/21 when the government had spent about 54 per cent of the budget earmarked for development works. Then the county was under the threat of COVID-19 and businesses had been trying to recover from the damages caused by the pandemic.

However, this year, coronavirus did not threaten the economy and people's lives except a brief spike in the COVID-19 cases in January 2022. Likewise, speaking to the journalists in a post-budget press meet after the presentation of the Replacement Bill, Finance Minister Janardan Sharma had told the journalists that he would spend about 10 per cent of the capital allocation each month and achieve about 90 per cent execution of it.

In a hope to have better environment to implement development projects and achieve the economic growth of 8 per cent, FM Sharma had significantly increased the size of budget to Rs. 1632.8 billion for this year against Rs. 1474.6 billion of the last year. But since the capital expenditure of the government was below one-third by the end of the first half of the year, the finance minister adjusted the size of the budget to 94.7 per cent (Rs.1546.2 billion) of the total.

Capital allocations were adjusted to Rs. 340.3 billion from original Rs. 378 billion while recurrent budget was lowered from Rs. 1065.29 billion to Rs. 1035.4 billion.

With just five working days remaining, there are less chances that the government could mobilise any significant amount of budget except making the payments to the contractors. According to the Federation of Contractors Association of Nepal, the contractors have to get the payment equal to more than Rs. 30 billion for the construction of public infrastructure.

Economist Dr. Achyut Wagle said that the failure was caused by the fiscal inefficiency and mismanagement. "There was no adverse situation like an emergency or pandemic in the country which challenged the budget mobilisation, so it’s purely an issue of fiscal mismanagement," he said.

However, total budget spending has exceeded this year compared to the last fiscal. According to the FCGO, the government has spent about 74.23 per cent of the total budget Rs. 1632.8 billion. It includes 88 per cent recurrent expenditure and just 52.45 per cent mobilisation of financing budget.

Last year, by the same date, expenditure stood at 75.23 per cent of Rs. 1474.6 billion including 87.17 per cent mobilisation of recurrent budget and 53.82 per cent of financing.

Meanwhile, the government received Rs. 1058.5 billion by Friday which is 85.33 per cent of the total annual target of Rs. 1240.5 billion. Of the Rs. 1180.6 billion revenue target, Rs. 1000.7 billion (84.76) was collected. But only 23.17 per cent target of Rs. 59.9 billion grant was met. 

Published in The Rising Nepal daily on 10 July 2022.