Halla Sansaar (हल्ला संसार)

Cap expenditure slow despite timely budget

KATHMANDU, DEC 04 -

Capital expenditure was down in the third week of November even though the budget had been issued on time raising hopes that development spending would swell in contrast to past years.

As per the weekly statistics of Nepal Rastra Bank (NRB), capital expenditure decreased by Rs 150 million year on year. Expenditure amounted to Rs 4.10 billion compared to Rs 4.25 billion in the corresponding period in the last fiscal year.

Finance Ministry Spokesperson Ram Sharan Pudasaini blamed the current budget system under which it takes a long time just to get the programmes approved, and the weak institutional capacity of the government agencies in charge of spending the allocated money.

“A succession of major festivals like Dashain, Tihar and Chhath followed by a long transport strike and the CA election also created an unfavourable situation for capital expenditure this year as government employees were called away to hold the polls,” said Pudasaini.

A sustained low capital expenditure over the last five years hurt the economy, and growth could not reach the 5 percent level despite prospects of post-conflict expansion. In the last fiscal year when the budget was presented in the ninth month, growth fell to a six-year low of 3.6 percent.

The annual budget presentation was delayed during three of the five years, while on the other two occasions, it was endorsed late.

Meanwhile, the slow progress in implementing development projects has been reflected in the decreased spending under financing. As of the third week of November, funds amounting to Rs 1.99 billion under the financing heading was spent against Rs 3.34 billion during the same period in the last fiscal.

Most of the money allocated under the financing heading goes to electricity, drinking water and airport infrastructure through public enterprises like Nepal Electricity Authority (NEA), Nepal Water Supply Corporation and Civil Aviation Authority of Nepal respectively, according to the Finance Ministry. Secretary at the Ministry of Energy Bishwa Prakash Pandit said that no allocation was made for land acquisition for transmission lines in this year’s budget which affected spending by the NEA.

“As land acquisition must be carried out before constructing transmission lines, a budget allocation for the former is a must,” said Pandit who is also the chairman of the NEA board. The Finance Ministry has already promised to provide Rs 1 billion for land acquisition purposes.” Pandit added that his ministry was committed to spending the entire budget allocation. Meanwhile, money is piling up in the government’s treasury pointing to the slow pace of spending. As of the third week of November, the government had Rs 50 billion in its coffers which has now shrunk to Rs 40 billion, according to an NRB official.

Tags: Economy