Govt indulges in maximum budget transfers as FY comes to a close

KATHMANDU, July 5: The government has once again indulged in a significant amount of budget transfer as the current fiscal year draws to a close. This has raised serious concerns over the government abiding by the norms of fiscal discipline.

A report unveiled by the Ministry of Finance (MoF) shows that various government bodies carried out cash transfers of more than Rs 4.40 billion alone in a one month period between mid-April and mid-May. Of the cash transfers made for 43 government bodies, 20 projects were related to the Ministry of Physical Infrastructure and Transport, 12 were related to the Ministry of Urban Development, four belonged to the Ministry of Home Affairs, three were related to drinking water and energy each, while one project belonged to the Ministry of Education.

The amount of cash transfers in the review month this year was significantly larger than the one made in the same period last year. According to the MoF records, the government carried out cash transfers of Rs 2.40 billion in between mid-April and mid-May of the last fiscal year.

Budget transfer means moving funds from one assigned program or project to another. In many cases, government agencies seek to adjust budgetary allocations after being unable to spend the earmarked money.

In the review month, the government made the largest budget transfers of more than Rs 1.1 billion from the Kathmandu-Tarai-Madhesh fast track project. Of the amount, Rs 900 million was sent to tunnel highway development projects while Rs 200 million was transferred to expansion of commercial routes of industrial corridors. A total of Rs 5.62 million was transferred to the Office of the President of Nepal.

As the government’s capital expenditure appears pathetic this year too, the government has expedited rampant spending as it used to do almost every year with an approaching end of the fiscal year. As of Friday, the government has utilized only Rs 168.03 billion (47.69 percent) out of the capital expenditure of Rs 352.35 billion allocated for the current FY.

The practice of carrying out development works in the last hour is mostly driven by a temptation to meet deadlines and spend allocated budgets before the end of the FY. This mostly results in substandard work along with inconvenience to the travelers while posing safety risks due to poor road conditions.

In FY 2023/24, the budget transfers accounted for Rs 256.41 billion out of the total budget of Rs 1.751 trillion. Breaching the state law, the then Finance Minister Barsha Man Pun transferred Rs 26.90 billion in the last month of the same year, while Rs 15.98 billion was transferred in the last week.

Prakash Sharan Mahat, former Finance Minister of the coalition government led by Maoist Leader Pushpa Kamal Dahal, also conducted budget transfers of Rs 11.64 billion just in the first three months of the FY 2023/24, even though the law bars the government from budget transfers within the first quarter of every FY.

The annual report of the Office of the Auditor General (OAG) shows that there are massive budget transfers conducted by the government offices almost every year. The OAG underlines the budget transfers as one of the means for increasing cases of irregularities in the bureaucratic system.

The Financial Comptroller General Office (FCGO) has barred all three tier governments from making unnecessary expenses in the last week of the fiscal year. Citing the provision, the MoF is found transferring the maximum budget before the FCGO prescribed deadline every year.