“We have arrears going as far back as 1957/58 and relating to past historical programs like the referendum of 1979 and the ‘Let’s Return to the Village campaign’ (Gaun Farka). As these arrears are not realizable, we must take initiatives to clear the mess,” stated Chief Secretary Dr Bhoj Raj Ghimire.
Speaking at the Public Accounts Committee (PAC) where the lawmakers had summoned all the secretaries of the different ministries to grill them over the huge arrears and unsettled accounts, Dr Ghimire requested the lawmakers to create a special high-level Arrears Clearance Commission to deal with the problem.
The PAC had summoned the secretaries after a recent report by the Auditor General’s Office showed that government arrears crossed Rs 69 billion in 2007/08. Of that total amount, unsettled accounts stood at Rs 26 billion, unaudited accounts at Rs 3 billion, revenues due and other receivables at Rs 39.22 billion and advances at Rs 8 billion.
Lawmakers had attributed the huge arrears to the government’s lack of financial discipline and failure to shoulder its fiscal responsibilities. They even accused the state administration of irregularities and flouting of the rule of law.
However, Finance Secretary Rameshwor Khanal stated that the multiple treasury movement mechanism and delayed reporting by the AG’s Office were the two of crucial factors affecting timely monitoring and realization of arrears.
“To deal with the first problem we are planning to implement a Single Treasury Account,” he said. As for the second problem, he suggested mid-term auditing and reporting by the AG’s Office.
Elaborating further on Single Treasury Account, Khanal said that under this system all public spending will be done through a linear channel and a limited number of offices. As these designated offices will make sure about compliance with financial norms, the system will check the creation of arrears in future, he added.
As for the arrears of the Ministry of Finance, which stood at Rs 26 billion in 2007/08, the Finance Secretary noted that the amount had swelled because the government spent Rs 18 billion on financially unviable public enterprises and failed to realize royalty and other dues from private firms.
The AG’s Office report names the Ministry of Finance as the ministry with the highest level of arrears and unsettled accounts. The Ministry of Water Resources, Ministry of Physical Planning and Works and Ministry of Forest and Soil Conservation are the other major entities lacking in financial discipline.
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