Data shows capital expenditure in two and half months lowest compared to corresponding periods of 3 years
KATHMANDU, Sept 28: While Prime Minister KP Oli has been warning ministers who do not make satisfactory progress in executing development projects that they will face the sack, development expenditure by the government so far this fiscal year has remained the lowest in recent years.
Summoning all ministers and secretaries to take stock of their performance, the prime minister has warned that he would remove any minister who fails to deliver ‘satisfactory’ progress in executing development projects.
Government data shows that progress in budget implementation has worsened this fiscal year.
According to data at the Financial Comptroller General’s Office (FCGO), the government has spent only Rs 6.9 billion out of this year’s capital expenditure budget as of Thursday (September 26). This is the lowest level of capital spending for the corresponding periods in the last three fiscal years.
With the Dashain festival starting Sunday, spending is unlikely to go up significantly in the next 20 days when the first quarter of the current fiscal year ends. The spending of Rs 6.9 billion in nearly two-and-a-half months is a small fraction of the Rs 408 billion allocated for capital expenditure for the current fiscal year. This means the government has been able to spend only 1.61 percent of the total capital budget so far.
The government had spent Rs 22.59 billion under the capital expenditure head in the first three months of last fiscal year, 2018/19. In the corresponding period of fiscal year 2017/18, the capital spending was Rs 15.7 billion.
Attributing the poor capital spending to the focus of the government on formulating laws and regulations during last fiscal year, Minister for Finance Yuba Raj Khatiwada had vowed to boost capital spending in the current fiscal year. In his speech to parliament last year, he even said that last fiscal year was the year for laying the foundations for ramping up development in the current fiscal year. He had said the government would intensify capital spending from Day One of the current fiscal year and would give officials no excuse for failing to spend.
However, the slow capital expenditure in the first quarter has dashed any hope of meeting the capital expenditure targets of the current fiscal year. Officials say there has not been any needed reform in the system to boost capital spending.
“With no sign of progress in capital spending, the prime minister is piling pressure on the ministers and the ministers are doing the same on the secretaries. You cannot expect new results when working style is the same old,” said a secretary who spoke on condition of anonymity. “Just because there is a strong, stable government does not necessarily mean better results will come overnight,” he added.
If it is to meet its capital spending target, the government should spend Rs 1.11 billion daily on average. However, the spending so far has remained at Rs 100 million on average.
While there are problems to immediately kick-starting all development projects from the very first month of the fiscal year, the snail-paced progress with an average spending of Rs 100 million is likely to result in low spending like in past fiscal years. For new projects introduced in the budget, the government has to prepare bidding documents, solicit tender bids and follow some set procedures, delaying disbursements to such projects for some months. However, the spending on multi-year contract projects can be started from the very first week of the new fiscal year and a huge portion of the budget is actually under such projects. In spite of this, the sluggishly low spending in the first two and half months suggests that under-spending of the capital budget is likely to persist in the current fiscal year.
Uttar Kumar Khatri, spokesperson of the Ministry of Finance, claimed that capital expenditure will increase significantly in the current fiscal year as the government has already formulated the working procedures for the spending.
“We were working with a mid-Asoj (September) deadline for formulating the work plans, procedures and regulations required for the spending,” he said. “We have told all spending units to complete the ongoing contract award process for projects within Asoj. Once the contracts are awarded, spending will start to surge,” he added.
While Khatri claimed that the government will boost its spending, the secretary cited various road projects like Tripureswar-Nagdhunga, Chabahil-Sankhu and Bhaktapur-Nagarkot, which have dragged on for years. “Even projects which the prime minister can monitor daily are in such a pathetic state. What would be the condition of projects that are outside Kathmandu Valley and out of sight?” he asked.
The government has been signing performance contracts with project officials since the last few years, but this has not helped to make the authorities more accountable. There is not a single instance of the government firing a project chief. “Even removing a single project chief for poor performance could lead to better results,” the secretary added.