Public Expenditure Review

Parliamentary supremacy in govt spending under serious question

February 17, 2019 07:37 AM Rudra Pangeni


Over Rs 800 billion spent out of budget in last three years

KATHAMNDU, Feb 17: Over Rs 800 billion has been spent out of budget endorsed by parliament over the last three years, putting under question the notion of parliamentary supremacy over government spending, according to a report prepared by the Public Expenditure Review Commission (PERC). 

What the PERC report, which was submitted to Minister for Finance Yuba Raj Khatiwada on Friday, reveals is the height of financial indiscipline in spending the taxpayer’s money.

The report exposes internal anomalies, which is a grave concern for all as Singha Durbar has been spending such a large amount of money without the knowledge of parliament.  

Indeed, the amount spent arbitrarily by Singa Durbar this way over the last three fiscal years equals the total annual budget of fiscal year 2015/16. To put things into perspective, the huge amount used to fund petty projects at the will of top leaders of political parties, ministers and senior bureaucrats is sufficient to finance half a dozen mega projects the government wants to build. 

The report shows that ministries and governments are more focused on funding their own projects through the back door and undermine implementing the programs approved by the budget. The report makes it clear that the incidents of such spending  recurred in the past few years as budgetary spending was meagre while budget transfers for financing non-budgetary projects were rife.

The commission was tasked to prepare a report to bring reforms in the way the public money is spent. 

Budgeting for programs and projects and allocations which were not included in the budgets tabled in parliament generated an unfunded liability of over Rs 800 billion. The amount is more than half the total budget of the current fiscal year.

This amount could have been sufficient for mega projects like the Budhigandaki Hydropower project of Rs 259 billion, Nijgadh International Airport of Rs 121 billion, Kathamandu Tarai Expressway of Rs 110 billion and few others. But instead, the taxpayers’ money was spent according to the petty interests of politicians and senior bureaucrats without a single visible output.

“The projects of small and medium size were created as they liked and funds were allocated, ” said Dilli Raj Khanal, chair of the commission after submitting the report to Minister Khatiwada.

“Later the same were turned into multi-year projects turning them a burden for the state coffers and all these happened breaching the parliamentary budget making process,” he added.

Most of such projects and the funds used for them either made little impact or were only managed for wooing voters or in many cases such funds were embezzled by political cadres.

The report has also revealed that the National Planning Commission, the agency that approves development projects and determines their rationale, has been bypassed and in a few cases it has also approved extrabudgetary projects. Most of these projects are mostly of small or medium size roads, water supply projects and small irrigation projects and other local projects lacking rationale.

“This practice has brazenly violated the parliamentary and democratic system and it is a big challenge and needs an immediate correction,” Khanal commented. Khanal said that the budget-making process needs a revamp and project selection has to be such that it utilizes the taxpayer’s  money best through proper project identification, selection, budgeting as well as budget implementation to pay development dividend to the public.

On the same issue of spending out of the budgetary system, the Office of the Auditor General in its 55th audit report published in April last year had revealed that such spending was to the tune of Rs 32 billion in the fiscalyear of 2016/17. The report states that the government has made spending against the budgetary principles and the Finance Ministry issued letters of budget authorization on its own for budget programs not endorsed by parliament. An excerpt of the OAG report on the matter reads, “The existing law does not permit issuing such authorization letters for any programs to the ministries but the Ministry of Finance issued such authorization at end of the fiscal year.”

Effectiveness of budget spending at the end of fiscal year has been repeatedly questioned and many assume such spending is made only on paper. The Ministry of Finance issued such authorization to a single ministry for extrabudgetary projects worth Rs 123 billion for 239 projects in fiscal year 2016/17 and they were also turned into multiyear contract creating burden for the next years too.

A similar eleventh hour spending recurred in last June and July months during the current government in which Finance Minister Yuba Raj Khatiwada, too, did the same and protected the back-door budget transfer and new project financing.


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