KATHMANDU, July 16: The tendency of spending the development budget haphazardly has continued this year. The trend of not showing interest for 11 months of the year and working at the end of the year has continued this year as well.
The then Minister for Finance, Prakash Sharan Mahat, allocated a capital budget worth Rs 302 billion for the current fiscal year 2023/24, however only Rs 183.84 billion has been spent as of Friday.
According to the Financial Comptroller General Office (FCGO), Rs 50 billion was spent between mid-June and mid-July. This amount is more than 27 percent of the total amount spent under the heading. This percentage is expected to increase further as expenditure details of the last two days of the fiscal year have not been included.
Although efforts were made to accelerate development work by implementing necessary procedures from mid-June to mid-July and managing contracts until mid-October to mid-November, these efforts have only been limited to words.
Uttar Kumar Khatri, Joint Secretary of the Ministry of Finance, explained that payments for completed work are typically processed towards the end of the fiscal year. This process results in higher expenditures observed from mid-June to mid-July.
Govt continues spending excessively in the last month
Khatri said that while some projects have been completed, there is a delay in payments due to the time required for bill submission and calculation. Due to the end of the year, the halted payment also occurs during this period.
The development budget has been spent haphazardly due to spending only at the end of the year which has raised questions about fiscal governance, while the targeted groups are not benefited as intended.
In the last fiscal year, a budget of 17.28 percent was spent just in the last month. The annual report of the Office of the Auditor General (OAG) shows out of Rs 1.421 trillion, Rs 245.67 billion was spent during mid-June to mid-July while Rs 88.66 billion was spent in the last week.
Over the past decade, the government has been barely spending around 80 percent of the allocated budget almost every year. The status of capital expenditure remains even more pathetic. This year, only 60.86 of the capital year has been spent in 363 days.
In the fiscal year 2019/20, the lowest percentage of the development budget was spent, amounting to only 46.36 percent of the allocated amount. On an average, the capital expenditure has not crossed 66 percent in a year.
About 80 percent of the capital budget was spent in the fiscal year 2017/18, marking the highest expenditure in the past decade.
Economist Dilli Raj Khanal considers the low spending of the development budget as a lack of accountability. “Failing to spend a notable development budget means there are adverse impacts on investment, production, and consumption.”
The 61th annual report of the OAG suggested that the practice of incurring heavy expenditure at the year-end needs to be checked through implementing specified programs within specified time as per the approved program and expenditure work schedule.
Although the Financial Procedure and Fiscal Responsibility Act-2020 has barred the government bodies from making withdrawals and expenses one week before the end of the FY, it is not being done in practice.
“If a system is developed to make instant payment right after the completion of work, it can help maintain cash flow, while it also checks the random budget transfers being done at present,” said the Auditor General Toyam Raya.
