Utilise funds on timeConstruction of crucial physical infrastructure projects required to unlock private investment and attain high economic growth may not move ahead at a desired pace in this fiscal year as well, as the government’s capital spending has not shown signs of gathering speed.
Construction of crucial physical infrastructure projects required to unlock private investment and attain high economic growth may not move ahead at a desired pace in this fiscal year as well, as the government’s capital spending has not shown signs of gathering speed.
The government’s capital expenditure stood at 4.6 percent of the allocated capital budget of Rs335.2 billion in the first quarter of the current fiscal year. The snail-paced capital spending was recorded at a time when the annual budget was presented in Parliament and approved before the start of the new fiscal year.
Earlier, the lengthy process of seeking the National Planning Commission’s permission to roll out programmes and projects included in the budget used to be blamed for low capital spending in the first quarter of fiscal years. Beginning this year, the government has removed this provision, enabling different ministries to implement budgetary programmes without seeking the permission of any authority. Also, clear-cut timelines were issued to deliver budgets to implementing agencies and initiate the process of hiring contractors.
Yet there has been no improvement in capital spending.
This is an indication that capital expenditure will once again bunch towards the last quarter of the financial year, resulting in construction of sub-standard infrastructure projects. This, in turn, is expected to push up future recurrent expenditure, as more funds will be required to repair and maintain physical infrastructure that was built poorly.
The government’s capital expenditure includes spending on civil works, purchase of land, buildings, furniture, vehicles, plants and machinery, among others. It is essential to spend funds allocated for these projects on time to bridge the infrastructure gap, which is considered a binding constraint for Nepal’s economic growth. But the government has time and again failed to address this issue.
It is now time for the government to resort to a carrot and stick approach to implement the capital budget so that officials who fail to fulfil their responsibilities are punished and those who meet the targets are rewarded.
Earlier, the National Planning Commission had framed a draft Bill to hold government bodies liable for losses triggered by delay in implementation of development projects and programmes.
The draft of the Monitoring and Evaluation Bill was framed after government bodies and officials expressed reluctance to take ownership of assigned tasks, preventing projects and programmes from taking off in a proper manner. But the draft Bill was never presented in Parliament.
The new government that assumes office after the provincial and federal elections must take initiatives to introduce this law. Unless there is a legal provision to discipline underperformers, capital budget will remain underutilised. This inactiveness will, in turn, prevent the government from transforming Nepal into a middle-income country within 2030 as envisaged.