Economists fear local units inheriting ‘fiscal anarchism’ from center

Published On: November 17, 2018 08:49 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Nov 17: Economists and experts have warned that the growing ‘fiscal anarchism’ at the center if shifted to provincial and local levels, will be disastrous. They have also called for fiscal discipline at all levels of the government to achieve effective and productive public expenditure. 

Speaking at a talk program on ‘Public Expenditure System in Federal Structure: Opportunities and Challenges’ jointly organized by Public Expenditure Review Commission (PERC) and South Asia Watch on Trade, Economics and Environment (SAWTEE), they called for a careful approach on public expenditure in the fledgling federal system. 

PERC Chairman Dilli Raj Khanal attributed the mismanaged public expenditure mainly to a tendency of starting projects without proper plan and preparation, which tends to create complications during the implementation phase. 

To address the pitfall in development projects, he suggested the need to spend a substantial amount of time on planning and preparation. 

Posh Raj Pandey, executive director at SAWTEE, cautioned that the country’s already growing recurring expenditure allocation might balloon in the new federal system where the number of administrative units has increased. 

“The growing fiscal anarchism is due to a tendency of allocating budget without figuring out the sources of funds and projects being launched without completing necessary pre-requisites,” said Pandey. “Lack of preparation causes projects to suffer cost and time over-run, making the administration inefficient,” he added. 

Referring to mismatched project prioritization and budget allocation, Balananda Poudel, former chairman of the Local Bodies Restructuring Commission, drew the attention of the government to effectively implement medium-term expenditure framework even at provincial and local levels. 

Baikuntha Aryal, secretary of National Natural Resource and Finance Commission, insisted that all the levels of governments needed to undertake budgetary exercise in a manner that federal government does before announcing the plans and fund allocation.

However, not all the entities are equally capable, as still 55 local bodies have yet to submit their budget even at the end of second quarter of the fiscal year, he said. He said local bodies needed some time to make the expenditure smoother, however, he also cautioned that the lapse in the first year should not be taken as precedence for second and third years.


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