Records of Nepal Rastra Bank (NRB) show that the government four-and-half months into this fiscal year has spent a mere Rs 3.93 billion of its capital expenditure budget, which largely finances development work. [break]
Though the figure is slightly better than last year´s, officials at the Ministry of Finance (MoF) said this improvement was nothing to be proud of, particularly as the government this year had managed to bring the annual budget on time.
“The spending has improved, but it is still far below target,” said Finance Secretary Krishna Hari Baskota, adding that he himself was surprised at the sluggish spending under capital expenditure. Top officials at key executing ministries attributed the present sluggish spending to two fresh trends seen in the government.
First, almost all the big ministries are currently reeling under ´differences´ between the political leaders heading the ministries and senior bureaucrats.
“This has affected day-to-day operations, quite apart from the impact it has had on the process of getting development projects approved by the National Planning Commission,” said an official at the Ministry of Irrigation.
A still worse trend, which officials cited as the second major reason behind low development spending, is that of ministers at the leading ministries in recent months demanding pre-payment of commissions for awarding contracts.
“Payment of commissions amounting to as much as 10 percent of total project cost was normal in the past as well. But that used to be after the contract process ended. Unfortunately, ministers are now demanding pre-payment of commissions,” said an official at the Ministry of Physical Planning and Works.
This trend has hit the process of tendering out development projects.
“It is for this reason that many ministries have failed to tender out new projects even to date,” said the source. MoF, on the other hand, had issued clear instructions to all the ministries to get their development programs approved by the National Planning Commission and complete the tender processes by mid-November.
Contractors concurred with what top ministry officials disclosed to Republica.
“Government employees are approaching the contractors, demanding pre-payment of commissions on behalf of the ministers,” said Jaya Ram Lamichhane, president of the Federation of Contractor Associations of Nepal.
Unfortunately, this is happening not just with fresh tenders, but also in projects which have already been tendered out, he added.
That is why even the multi-year contract large-scale projects that have already been tendered out are not working properly. Execution of development projects under the Ministry of Local Development also suffers from the same problem, said another government source.
Irked by the less-than expected level of spending under the capital expenditure budget, Finance Minister Barsaman Pun on Tuesday called a meeting of the chiefs of various development projects and instructed them to work sincerely.
“The government is watching each and every project closely. You all will be judged on the basis of how you perform,” a participant at the meeting quoted Pun as saying to the project chiefs.
However, unless the government manages to control the corrupt behavior of ministers themselves, officials ruled out any chance of the situation improving substantially.
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