Only 8.13 percent of the money earmarked for national pride projects has been spent during the first six months of the fiscal year.

According to a mid-term review of the budget, there has been zero spending on five national pride projects while expenditure on the other 16 ranges from 0.68 percent to 40.06 percent of the allocated amount.

The schemes which saw zero spending are Second International Airport in Nijgadh, Pokhara Regional International Airport, Upper Tamakoshi Hydropower Project, Gautam Buddha Regional International Airport in Bhairahawa and West Seti Hydropower Project.

Mukunda Prasad Paudyal, spokesperson for the Finance Ministry, said that the concerned ministries had reported that no work could be done due to the earthquake and Indian embargo. The construction work at the Upper Tamakoshi Hydropower Project resumed only recently after coming to a halt following the tremor.  

The national pride projects have stalled for other reasons too. A loan agreement is yet to be signed with China Exim Bank for Pokhara Regional International Airport, as a result of which the construction work has not started.

The government said that the budget for projects like Rani Jamara Kulariya, Bheri Babai Diversion, Babai Irrigation, Pashupati Development Trust, Lumbini Development Trust and Upper Tamakoshi would be fully spent as supply disruptions have ended.

"Spending on the Mid-Hill Highway and Upper Tamakoshi projects could even go over the allocated amount,” the review report said.

The working hours at Gautam Buddha Regional International Airport has been increased to 12 hours from 8 hours to make up for lost time as work was affected by the blockade by India, said Om Prakash Sharma, chief of the project. The rush schedule is intended to ensure that the project is completed within the deadline.

Among the 21 national pride projects, the Karnali, Kali Gandaki and Koshi north-south roads saw the highest spending of 40 percent during the first half of the year. These projects were followed by the Pushpa Lal Highway, known as the Mid-Hill Highway.

Spending on the Kathmandu-Tarai Fast Track has been very low at just 0.68 percent of the budget followed by the Postal Road with 1.18 percent. The fate of the planned Kathmandu-Tarai expressway remains uncertain as the government's bid to award the contract to an Indian company has drawn controversy.

Meanwhile, the upgradation work at the Postal Road has stalled after the Indian contractor fled.

Unspent funds should be returned, says FinMin

The Finance Ministry has said that programmes failing to start work by April 12 will lose their budget allocations and have to return the unspent funds the next day.  

Even programmes and projects failing to spend 50 percent of the allocated budget will have to return the budget, according to the Mid-Term Review of the Budget. “The Finance Ministry will write to the ministries asking them to inform it about such programmes by the first week of April.”  

According to the ministry, it will divert the funds surrendered by under-performing projects to those making greater progress. The ministry had announced a similar measure in the past, but it was not implemented properly. According to Finance Ministry officials, only a few projects returned their funds last year.

Govinda Nepal, the ministry's chief economic advisor, said that the decision would be strictly implemented this year. “Unlike in previous years, we have to be firm this year because there is a revenue deficit,” he said. “We are not in a position to provide extra funds to better performing projects which need more resources.”  

According to the ministry's mid-term review document, the funding for first priority (P1) and second priority (P2) projects will be pulled if it is not spent until April 12.  

“The amount will be diverted to better performing projects as per need, it said. If the budget allocated under the foreign aid heading is not spent by any project, such schemes will be asked to surrender the matching funds allocated by the government too.

According to Mukunda Prasad Paudyal, spokesperson for the Finance Ministry, the ministries are reluctant to return the allocated money as they think that it will be difficult to get it back for the same projects again.  

“As long as the provision of reward and punishment is not implemented, there is little chance that spending will improve; and the ministries will not return as much of the budget allocation as they should,” he said.