Budget execution off to a slow start

Published On: September 19, 2017 02:42 AM NPT

KATHMANDU, Sept 19: Capital expenditure over the first two months of Fiscal Year 2017/18 remained below 2 percent, despite the government introducing the budget.
Also, this is the first time that the government has allocated the budget directly to the local units.

According to the Financial General Comptroller Office (FGCO), the government has managed to spend only Rs 4.27 billion of the budget allocated development works in the first two months of 2017/18. The amount is only 1.27 percent of the total capital expenditure of Rs 335.18 billion that the government has allocated for development works in the current fiscal year. 

If the capital expenditure data of the last fiscal year is something to go by, the government is likely to spend far below the development budget that it had spent in the first quarter of 2016/17. 

Out of Rs 311 billion allocated for capital expenditure in 2016/17, the government had spent 3.4 percent, or Rs 10.7 billion, in the first quarter. This means that the government has to spend more than what it managed to spend in the first two months in the third month of the current fiscal year to meet the level of capital expenditure in the first quarter of 2016/17.

The government's recurrent expenditure has, however, reached Rs 119.18 billion -- 14.83 percent of the total allocated budget. The government has said that it will spend Rs 803.53 in recurrent expenditure in the 2017/18.  

Though the government officials, private sector and economists used to attribute poor spending to delay in budget announcement, unveiling of budget in time has not helped to address the challenge of budget execution in the first two months of 2017/18.

Concluding that politics was prevailing in the budget process, political parties made a constitutional arrangement to table budget on Jestha 15 (last week of May).

The budget spending remained dismal in the review period of the current fiscal year even though the budget was endorsed by the parliament on time. 

According to the FGCO, the main government agency responsible for treasury operation, the government spent Rs 124.28 billion in total budget, which includes capital, recurrent and financing, in the first two months of 2017/18. 

The government has set a target of spending Rs 1,278.99 billion in 2017/18.
As part of a campaign to increase budget spending, the government has announced the current fiscal year 'Budget Implementation Year'. 

Stakeholders, however, say that though the budget spending remains low in the initial months, it gains momentum in the coming months. However, low spending compared to same months of 2016/17 indicates dismal performance of the government toward budget execution. 

“In the previous years, spending used to go up at least at the rate of 3 percent per month. This year, however, it is below one percent in the first two months,” an official at the Ministry of Finance told Republica. 

In the two months of the current fiscal year, the government has been able to mobilize Rs 90 billion in revenue

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