Only 2.8 percent of development budget spent so far

KATHMANDU, Dec 16: The government has so far managed to spend only 2.8 percent of Rs 208 billion allocated for development activities in Fiscal Year 2015/16.

According to officials, only Rs 5.74 billion has been spent in the first four months of 2015/16 which started in mid-July, thanks to Tarai unrest and Indian blockade.Shortage of fuel and construction materials has halted construction works, affecting public spending, the Nepal Rastra Bank (NRB) said in its macroeconomic report of the first four months of 2015/16 unveiled on Wednesday.

Low public spending has made huge impact on private sector investments as all trade, production and service sector, according to the report.

"Development projects would have created demand and also encouraged private sector to invest more," said Shankar Prasad Sharma, former vice chairman of National Planning Commission, said. Low spending will also take toll on employment generation and ultimately affect economic growth, Sharma said, adding that more people will lose job as it will have multiplier effect will be in different sectors.

Sluggish progress in public spending, however, is not a new story in Nepali context. Progress in initial months has always remained slow because of different factors like lack of project readiness and slow tender awarding process. Supply disruption and fuel shortage due to border obstruction are the new factors affecting public spending this year.

Delay in reconstruction and rehabilitation of quake-hit structures is another reason behind slow spending. Though the government has allocated Rs 91 billion for reconstruction works in 2015/16, reconstruction works have yet to begin due to delay in formation of National Reconstruction Authority.

The amount spend in first four months of 2015/16, however, is up by 23.1 percent compared to same period last year. This year, the government has increased development budget to Rs 208 billion from Rs 116 billion keeping in view reconstruction works.

Recurrent spending, however, fell by 20 percent to Rs 58.05 billion in the review period compared to 7 percent growth in the same period of last fiscal year.

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