Nepal has been grappling with a longstanding issue that has held back its development - the lack of effective implementation of development projects. Despite the country receiving assistance from the international community including multilateral development partners such as the World Bank (WB) and the Asian Development Bank (ADB), Nepal has struggled to make satisfactory capital expenditure and meet its growth targets. This raises a very simple yet very crucial question: how can the country develop when it is unable to spend the funds allocated for development? Moreover, the failure to invest in capital expenditure has impeded the inflow of foreign direct investment (FDI) and the creation of employment opportunities within the country.
Recently, representatives from the ADB and the WB met with Finance Minister Dr Prakash Sharan Mahat to discuss their concerns over the government's slow mobilization of funds for development projects. The development partners urged the minister to take initiatives for the effective implementation of various projects and programs funded by them in Nepal. They expressed their dissatisfaction with the government's inability to spend the funds allocated for development projects and highlighted the slow progress of projects due to delays in site clearance.
The slow pace of development in Nepal has been a persistent issue that successive governments have failed to satisfactorily address. Despite receiving funding from multilateral development partners, the country has struggled to achieve satisfactory levels of capital expenditure and meet its growth targets. The government has largely attributed this to procedural issues, land acquisition, and site clearance, which have resulted in significant delays in implementing projects. This failure to invest adequately in capital expenditure has severely impacted the country's growth targets, employment opportunities, and money supply within the system. Capital expenditure has only reached 24 percent of the allocated amount as of the first nine months of the current fiscal year, raising significant concerns for development partners.
Recurrent spending spikes, capex rising steadily
The WB and the ADB are among Nepal's major development partners, and their dissatisfaction with the government's performance is a significant concern. The development partners have expressed their willingness to assist Nepal in its development targets, but they have highlighted the lack of timely spending of the funds as a significant obstacle. Therefore, the government must prioritize effective implementation of development projects if it is to realize the dream of development.
One of the significant concerns highlighted by the development partners is the ongoing economic problems that the country is facing. The priorities of the government were among their major interests, while the government for the past few months has been entangled in political issues. The government must prioritize the economic well-being of its citizens and take initiatives to address the concerns of the development partners. In Nepal, multilateral development partners contribute 71.0 percent of the total foreign aid disbursement. The ADB provides around 30-35 percent, and the WB contributes about 25-30 percent. Overall, these institutions account for 60-70 percent of Nepal's annual multilateral aid. These facts speak volumes about the role of these two multilateral development partners in the country’s development.
Meanwhile, the ADB has expressed its concern over the Dudh Koshi Hydropower Project, while the WB is concerned about the Arun Hydropower Project. Both projects are crucial to Nepal's development, and the government must take steps to ensure their timely implementation. Moreover, the development partners have expressed their interests in budgetary assistance for road projects in Nepal, indicating the importance of transportation infrastructure in the country's development.
To address the problem of insufficient capital expenditure, the government needs to take concrete steps to tackle procedural issues, land acquisition, and site clearance problems. These factors pose significant obstacles to timely implementation of development projects, and their resolution should be a priority for the government. Moreover, the government must ensure that sufficient budget allocation is made to guarantee timely implementation of development projects.
Nepal's development problem is not a lack of funds as such but, ironically, an inability to spend the money allocated for development! This has severely hindered the country's progress. The development partners' dissatisfaction with the government's inability to spend the allocated funds is a significant cause for concern. The government must prioritize the effective implementation of development projects, ensure timely expenditure of funds, and address procedural obstacles, land acquisition, and site clearance problems.
In short, the government must also prioritize the economic well-being of its citizens and take active measures to address the development partners' concerns. Nepal underwent a major political transformation over a decade and a half ago. So, it’d not be otherwise to expect economic progress and prosperity to start taking place now. The current rulers have to be able to instill hope in the people that the country is moving towards a prosperous future not only politically but also economically. They cannot afford to fail any longer.
