KATHMANDU, Feb 7: The government has identified ten reasons contributing to the lower-than-expected public expenditure. Thursday’s mid-year budget review from the Ministry of Finance noted problems with budget allocation, specifically that insufficient vetting occurred before funding was allocated.
Additionally, the report pointed out that budget allocation continues for projects where processes like land acquisition, compensation determination and distribution, and environmental clearances are incomplete. This has hindered the expected improvement in public expenditure.
The ministry further noted that failure to propose budgets based on detailed project reports, total costs, construction modalities, and objective evaluations of economic, social, financial, technical, and geological aspects has led to difficulties in budget implementation and adherence to expenditure plans.
Diversifying Government Revenue
"Proposing minimal budgets for projects with secured funding while simultaneously introducing new projects from the available budget has led to difficulties in meeting financial obligations. As a result, the number of incomplete projects is rising, making overall expenditure management more challenging," the Finance Ministry stated.
A lack of proper coordination among federal, provincial, and local governments, as envisioned by the constitution, has led to duplication in social security programs, grant schemes, and development projects. This has negatively impacted spending effectiveness and equitable resource distribution.
The mid-term review also highlighted issues such as delays in appointing project heads and staff, frequent transfers, shortages of construction materials, and inefficient labor management as contributing factors to low expenditure.
The ministry noted that delays in amending or formulating necessary laws, guidelines, and procedures for implementing approved annual programs have resulted in an unclear expenditure framework even by the mid-year point.
For projects funded by foreign sources, the government has been allocating insufficient counterpart funding. Additionally, compliance with procurement and accounting procedures set by development partners has not always been met, delaying reimbursement.
Delays in distributing allocated funds for new projects and programs have further slowed project implementation. The review emphasized that issues identified by the National Development Problem-Solving Committee and sectoral development committees remain unresolved due to the failure to implement proposed solutions, leading to recurring challenges.
