National Reconstruction Authority spent just 65 percent of its budget last fiscal yearOfficials blame the use of existing government mechanisms to channel the funds for subpar spending.
The National Reconstruction Authority, formed in the wake of the devastating 2015 earthquakes to reconstruct and rebuild public infrastructure and private homes, is spending a lot less than it is supposed to.
The authority, formed to accelerate reconstruction works, spent just 65 percent of its budget last fiscal year. The authority had received a budget of Rs138.42 billion in the fiscal year 2018-2019, but it was only able to spend Rs89.35 billion, which is just 64.5 percent of the budget, according to records from the authority.
Manohar Ghimire, joint-spokesperson for the authority, admitted that the budget expenditure had not been good enough.
“As the budget is spent through the existing government agencies, the expenditure pattern is no different from that of other government agencies,” Ghimire told the Post.
With just over a year left in the authority’s tenure, 472,351 houses have been rebuilt while 666,570 houses are being reconstructed, according to the authority.
The reconstruction authority’s low spending can primarily be attributed to its failure to spend funds pledged by donors, as the expenditure of the governmental budget alone stood at 81 percent.
According to Ghimire, the delay in getting clearance from donors for a number of projects affected the overall expenditure. Resources promised by India, in particular, have not been spent. According to the authority, not a paisa was spent last fiscal year from the Rs 2.71 billion allocated as part of India’s $750 soft loan pledged through its Export-Import Bank.
The government had also allocated Rs 10 billion as part of a reimbursable grant from India, but the spending here too stood at just 4 percent, while a cash grant of Rs1.4 billion was not spent at all. India had pledged a total of $1 billion—$750 soft loan and $250 grant—for reconstruction.
The failure to spend the budget allocated under Indian assistance may be attributed to various preconditions stipulated by the Indian government, which include the use of at least 75 percent of physical Indian components like plants, machinery, equipment and services and 50 percent of Indian components in civil works.
According to govenrment officials, it is difficult to use 75 percent Indian materials in all reconstruction works, especially smaller projects like rebuilding district health posts.
The government has now sought approval from India to divert this amount to other infrastructure projects, citing the impossibility of using all the funds for reconstruction.
The budget allocated from the Asian Development Bank, however, has been spent relatively well. The expenditure for the bank’s reimbursable loan stood at 74 percent.
“The bank’s funds were for school buildings and other public infrastructure such as roads,” said Ghimire. “So most of the works have either been completed or are under construction, which resulted in better expenditure.”
According to Govinda Pokharel, former chief executive officer of the authority, the use of the existing government mechanism, which is notorious for under-performing, is to blame for the low spending.
“How can we expect better results if we use the same institutions and the same procurement law?” Pokharel asked.
After the deadly earthquake of April 2015, which killed nearly 9,000 people and damaged nearly a million houses, the authority was formed to fast-track the reconstruction process on the grounds that employing regular government institutions could cause delays. But immediately after formation, the authority was mired in politicisation and saw a new chief executive every time there was a change in government.
In order to fast-track the procurement process for reconstruction, a number of changes in law regarding the formation of the authority had been made. But, according to Pokharel, government agencies don’t follow the revised procurement process.
The government had initially envisioned a reconstruction fund along with the reconstruction authority and using that fund through a fast-track mechanism. But the construction fund was not created, as the establishment of the authority itself was delayed by eight months after the quake due to political wrangling.
“The donors were already signing agreements with the Finance Ministry and the implementing agencies had been selected when the authority was established,” said Pokharel. “It was difficult to tell donors to change their implementing agencies after they had already signed the agreement.”
Former finance secretary Rameshore Khanal, however, sees the progress in reconstruction, despite frequent leadership changes. “I think the contracts of almost all projects have been awarded,” said Khanal.
“But the delay in paying the second and third instalments to the people to rebuild houses for their failure to meet the conditions might have affected spending.”