FM Dr. Mahat begins budget execution initiatives

 Kathmandu, July 26

Immediately after a disappointing year for budget implementation with the utilisation of less than two-third of the capital allocation, Finance Minister Dr. Prakash Sharan Mahat has begun manoeuvre to execute the budget from the beginning of the fiscal year.

Exhibiting a sort of 'aggressiveness' as stated by the Ministry of Finance (MoF), Dr. Mahat called a meeting of the secretaries of all federal ministries on Wednesday to urge them to give priority to the budget execution from now.

The finance minister has just returned to the Capital after making inspection trips to various customs and revenue offices across the country. He had directed the customs and revenue officials to put efforts to meet the revenue targets so the government has enough funds to finance the development projects.

The new Fiscal Year 2023/24 began 10 days ago on July 17. In the previous fiscal year, the government could mobilise only Rs. 233.7 billion capital budget – 61.44 per cent of the total allocation of Rs. 380.3 billion. Last year, 79.69 per cent of the total expenditure estimates of Rs. 1793.8 billion could be realised while revenue collection was Rs. 1031.7 billion – 70.73 per cent of the total target, according to the statistics of the Financial Comptroller General Office (FCGO).

Thus there was a gap of about Rs. 398 billion between the revenue collection and expenditures.

In the discussion with his fellow secretaries, FM Dr. Mahat directed the secretaries that only the projects that have a complete Detailed Project Report (DPR) should be open for contract process.

If the project need budgets for the DPR or if it is the priority project, the ministries could complete the DPR and go for contract by mid-November 2023. If the project couldn't be contracted out after completing the DPR by mid-November, it shouldn't be taken forward, the MoF quoted FM Dr. Mahat in a statement.

"The contract must be awarded within mid-November. The government has not been able to make payment against some obligations that have been created. The bill given by the contractor of the project should come to the MoF within one month," he said while adding that the MoF will review the bill and approve within 15 days.

According to him, there wouldn't be any expenses in the last month of the fiscal year (mid-June to mid-July. If the work is done and the liability has been created, the payment should be made at the earliest.

But in the current as well as previous years, a large chunk of the development budget – as much as 25 per cent of the total allocation – has been mobilised in the final month. For example, Rs. 82 billion (more than 20 per cent) of the capital expenditure is made in the month of Ashadh. Yet, a large due of the contractors is still to be paid.

"The contractors also have problems, we should not ignore them. Obligations that are included in the budget should be paid on priority basis. If there is no budget title but the obligation has been created, respective ministry should make their own considerations," said Dr. Mahat.

His statement has come at the time when the contractors across the country have announced protest programmes demanding the government pay the remaining liabilities to them which is in tens of billions of rupees, amend the recent government order to extend the deadline of the projects that have been delayed, and termination of sick and stalled projects.

Meanwhile, FM Dr. Mahat maintained that the line ministries should understand that they need to work with limited resources in the midst of larger needs. "We cannot give as much budget as you want. There is a huge gap between our needs and resources," he said while instructing the secretaries not to take forward the projects that don't have resource assurance.

He said that no one should shy away from their responsibility, because doing so wouldn't bear any results. "There is no problem-free area, but efforts are being made to improve the situation.  We have given site clearance for development project a top priority," said Dr. Mahat.

Published in The Rising Nepal daily on 27 July 2023.