Capital expenditure continues to remain low with four months left for the fiscal year to end. According to the Financial Comptroller General Office (FCGO), which keeps records of the government’s expenditure, capital expenditure amounted to 22.61 percent of the budget allocation as of March 13, one day before the end of the eighth month of the fiscal year.
The government has earmarked Rs 85.1 billion for capital expenditure, and only Rs 19.24 billion of it has been spent so far.
With the capital expenditure remaining poor, the Finance Ministry recently wrote to different ministries asking them to inform it about the projects where there is no possibility of further expenditure so that the extra funds could be transferred to better performing projects.
“Besides asking them to report such projects, we have also asked them to better coordinate with the concerned ministries and bodies if that was the reason behind the slow capital spending,” said Ram Sharan Pudashaini.
Finance Minister Ram Sharan Mahat has been warning that the budget allocations of ministries failing to spend adequately would be transferred to better performing ministries and projects.
The poor capital expenditure is sure to hit Nepal’s economic growth prospects. The Asian Development Bank recently downgraded the projected growth rate citing poor capital expenditure despite better performances of the agriculture and service sectors. The ADB, in its report on Nepal entitled Macroeco-nomic Update, projected a rate 1 percent lower than the government estimate referring to poor capital expenditure.
While the government is convinced that the targeted growth of 5.5 percent will be attained, the ADB said the growth rate would remain at 4.5 percent.
The government has predicted that expenditure will amount to 84.3 percent of the budget allocation during a mid-term review of the budget.
Meanwhile, the secretaries at the ministries which have been allotted massive budget funds admitted that expenditure under their ministries had been poor, and pledged to increase the expenditure massively within the next two months. “Due to the long tender and contract awarding processes, capital expenditure has bee poor until now,” said Kishor Thapa, secretary at the Ministry of Urban Development. “Now, the actual work is being conducted in the field, and following the release of payment to the contractors, you will see much progress in expenditure by mid-May.”
Until last week, the Urban Development Ministry had been able to spend only Rs 1.56 billion against its total capital budget of Rs 7.94 billion. Likewise, the Ministry of Physical Planning, which has a total of Rs 30 billion under the heading, spent just Rs 6.05 billion. The Irrigation Ministry spent Rs 2.90 billion out of the Rs 11.40 billion allocated.
Similarly, the Energy Ministry spent just Rs 200 million against the allocation of Rs 1 billion. Most of the resources set aside for the energy sector go to the Nepal Electricity Authority (NEA) through the financing heading. The government has allocated a total of Rs 30 billion for the energy sector this fiscal year.
Likewise, the Tourism Ministry had spent Rs 130 million against the allocation of Rs 620 million as of last week.
According to the Finance Ministry, out of the Rs 78 billion allocated for energy, drinking water and airport infrastructure this year, only 8 percent has been spent until last week.
Energy Secretary Bishow Prakas Pandit said that work was progressing at most of the hydropower projects being developed by the NEA, and it was in need of extra money to complete them.
He added that it would be difficult to spend the allocated budget for transmission lines due to land acquisition-related problems. A total of Rs 13 billion has been allocated for transmission lines in the Rs 30-billion energy budget. Energy is the first priority of the government this year.
24.99°C Kathmandu
