Govt spends 52. 2 % of capital budget

Kathmandu, July 8

Capital budget mobilisation has continued with the pitiful trend and remained one of the worst in the past several years.

The utilisation of the capital budget allocated for the development works for this Fiscal Year 2023/24 has crossed the halfway mark to reach 52.2 per cent on Sunday, according to the Financial Comptroller General Office (FCGO).

Then Finance Minister Dr. Prakash Sharan Mahat announced the budget of Rs. 1751.3 billion with a capital allocation of Rs. 302 billion. According to the FCGO data, the government could spend only Rs. 157.7 billion while only eight days are left to end this fiscal year.

While the allocation for the financing – budget allocated to repay the capital and interest of the loans obtained by the government – was higher than the development budget, the latter's performance has also remained better.

The government has spent Rs. 240.9 billion in financing which is 78.36 per cent of the total allocation. Total expenditure from the treasury is 1,322.6 billion, 75.52 per cent of the total budget.

The trend of the capital budget spending has remained pathetic in the past three years as well with the total mobilisation remaining below 56 per cent of the actual allocation.

In the last FY 2022/23, the government could spend 55.22 per cent of the allocation of Rs. 380.3 billion during the same period. As the profound impact of the COVID-19 pandemic, the FY 2021/22 witnessed the worst performance in the development works and the government ended up with just 46 per cent capital budget utilisation. In 2020/21, about 53.6 per cent of the development budget was used.

Every finance minister has announced and implemented policies to make the budget mobilisation effective and expedite the development works but none of them could make a nudge.

Economists have been saying that fiscal inefficiency and mismanagement have been hampering the performance of the development budget. They have suggested an overhaul in the budget mobilisation system.

Economist and Member of the National Planning Commission (NPC) Dr. Ramesh Chandra Paudel said that the instability in the leadership of the key ministries including the Finance Ministry was the major reason behind the poor fiscal performance.

"There is a frequent change of ministers and new ministers reshuffle the bureaucracy including the project managers which has a detrimental impact on the fiscal performance and project development," he said.

Dr. Paudel also said that the planning process has multiple weaknesses. The NPC has mandated that the project could be included in the budget only after completing the Detailed Project Report (DPR) but in the end, powerful leaders and ministers break this rule and include the project as per their interest or whim.

Meanwhile, the Ministry of Finance sometimes delays the disbursement of the required budget to the projects and programmes due to poor revenue collection, said Dr. Paudel. This delay has long been impacting construction entrepreneurs and other vendors. As a result, the progress of the development projects has been disturbed.

According to Dr. Paudel, failure to win the confidence of the concerned stakeholders of the development projects has also caused various disturbances and impacted the progress. 

 Published in The Rising Nepal daily on 9 July 2024.