KATHMANDU, Jan 25: The government has been facing a massive rise in demand for non-budgetary funds for the preparation of mid-term elections and procurement of vaccines against COVID-19 along with the unhealthy competition to extend the institutional structures and more recruitment of staff.
Unveiling the mid-term review of the budget implementation on Sunday, the Ministry of Finance (MoF) said it is under pressure to transfer funds from the national priority projects to the non-budgetary headings due to the same reason. As a result, the recurrent expenditure in the first half of the current fiscal year surged 10.56 percent compared to that of the same period last year.
According to the MoF report, during the review period, the government spent only 14.4 percent of the allocated capital expenditure of Rs 352.92 billion. The spending in development projects between mid-July and mid-January was 19.6 percent less compared to the amount of the same period last year.
Delay in disbursement of budget, practices of breaching the standard of funds utilization, non-cooperation in policy reform related to budgetary assistance and weak implementation of Appropriation Bill have been pointed out as the main challenges in the utilization of the government budget this year.
The low capital expenditure has also been blamed for the slow economic revival seen in the manufacturing sector in particular. According to the MoF report, only 54 percent of the industries have come into full operation following the lockdown.
Despite facing pressure in revenue collection and capital expenditure, the government has kept amounts set under these headings unchanged in the mid-term budget review. The government has earmarked expenses of Rs 1.47 trillion. Of the allocated amount, Rs 1.11 trillion is to be managed from government revenue collection, Rs 60.53 billion from foreign grants and Rs 299.50 billion from external loans.