Such a scenario surfaced after fresh data of capital spending forwarded by 27 different government ministries showed they had managed to spend about Rs 16 billion over the span of eight-and-a-half months.[break]
“The amount spent so far is mere 22 percent of the annual capital allocations. Even if we make a very optimistic projection including donors´ grant and kinds support, which are not included in this figure, we see little chance of total capital spending crossing over 35 percent (of the allocation) by the end of first nine months of 2011/12,” said a senior MoF official.
And given that the existing fiscal norms restricts the government from spending more than 40 percent of the total allocations in the last quarter, he said capital spending over this fiscal year could remain confined at around 75 percent of the initial promise only.
If his calculation is anything to go by, development spending of the government over this fiscal year could remain at just over Rs 54 billion. The projection is some Rs 10 billion less than even the revised capital spending target that MoF unveiled during the mid-term budget review.
The situation, meanwhile, has exerted severe pressure on the government to lift the fiscal norms, under which it has committed to cap total spending for the last quarter at 40 percent of total capital budget and limit the 12th month´s spending at 20 percent of annual allocations.
“We will not relax the prudent norms irrespective of the pressure,” said Lok Darshan Regmi, chief of budget division at MoF.
Finance Minister Barsha Man Pun, who reviewed the status capital spending at a program in which government Secretaries from 27 different Ministries attended on Wednesday, also echoed what Regmi stated.
However, other officials at the MoF said the Ministry might need to ´review´ its stance particularly considering the ´necessity´ of development projects and country´s development aspirations.
“If we did not relax it, we will fail to spend committed volume of development budget. I do not think the government is ready to face this criticism, even though the finance minister is rejecting any relaxation on cap now,” said the source.
Citing delayed budget and low spending, the government had relaxed the norms last year as well.
The government had put in place the cap on capital spending mainly to control haphazard spending at the last hour of fiscal year. It was adopted after MoF assessed that such final hour spending was causing huge leakage of resources and corruption.
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