PM and FM intensify dialogue with provinces

Kathmandu, Dec. 4: The government has accelerated efforts to boost the capital expenditure through the activation of multiple mechanisms created to coordinate between the federal and provincial governments.

Through the Intergovernmental Fiscal Commission, the Finance Minister is communicating with the Economic Affairs ministers of the provinces and the Prime Minister is coordinating with the Chief Ministers of the provinces through the Inter-Province Council.

The two mechanisms were created to create coordination and communication among the different levels of governments in order to forge effective partnership in development, said Secretary of the Ministry of Finance Rajan Khanal.

Finance Minister Dr. Yuba Raj Khatiwada had interacted with the provincial ministers about implementing fiscal federalism and increasing capital expenditure.

Secretaries of the ministries of economic affairs and planning also updated him about the challenges of the provinces on November 29.

Khanal said that the government was concerned about the low expenditure rate of the development budget.

However, he said that the capital expenditure was higher than what was reported to the Financial Comptroller General Office (FCGO) as the grants like the fiscal equilisation grant sent to the local bodies is marked as current expenditure.

“The ministry is planning to mark the grant for the development project or the budget that contribute to the capital formation as the capital budget and its reporting will also be made in the same way. A new coding will be used in the fiscal reports of the provincial and local governments,” he said.

Likewise, the federal government is not getting the proper reporting of the expenditures made at the local levels.

Software called SUTRA has been used for the reporting but in absence of effective streamlining with the Treasury Single Account (TSA), a system to manage the public funds, it has failed to deliver the real statistics.

According to the FCGO, the capital expenditure of the government till Sunday was 10.92 per cent which is almost 3 per cent higher than of the same period last year.

Last year, about 8.16 per cent of the capital budget was spent till the end of November.

The size of capital budget this year is Rs. 313.99 billion.

Similarly, recurrent expenditure stands at 26.61 per cent and financing expenses 9.99 per cent making the total expenditure of 20.90 per cent of the Rs. 1.31 trillion budget announced for the current fiscal year 2018/19.

Last year, about 22.89 per cent budget was utilised in the same period owing to the high rate of current expenditure, 31.76 per cent.

 Published in The Rising Nepal daily on 5 December 2018.