Take measures to boost capital expenditure

Published On: February 15, 2024 07:41 AM NPT By: Republica  | @RepublicaNepal

The government spent only 21.05 percent of the funds allocated for development works in the first seven months of the current fiscal year. According to records of the Financial Comptroller General's Office, the government spent Rs 63.57 billion out of the allocated amount of Rs 302 billion under the heading of capital expenditure. In terms of the amount, the government's efficiency appears even more dismal this year compared to the last fiscal year. In the review period of FY 2022/23, the government exhausted Rs 66.29 billion (17.43 percent) in capital expenditure. On the other hand, the government spent Rs 509 billion in recurrent expenditure in the first seven months of the current FY, making up 44.58 percent of the initially allocated budget of Rs 1.141 trillion under that heading. This troubling situation needs improvement for the health of the country's economy.

One of the reasons behind the dismal capital expenditure in Nepal is that most of the infrastructure projects to be built by the government are carried out without adequate preparation. Delays in the tender process, lengthy bureaucratic procedures, and issues related to projects funded by donor agencies are attributed as major factors behind slow capital expenditure. Every year, the government is found to make slow expenses under capital expenditure, while expenses speed up at the eleventh hour towards the end of the fiscal year. It is a matter of concern as the government's inability to improve capital expenditure not only degrades the quality of development works but also worsens employment opportunities and cash flow in the market, further exacerbating economic slowdown. Finance Minister Prakash Sharan Mahat said that policy and legal hurdles seen in development projects had led to the slow pace in capital expenditure. He, however, claimed that the government had recently reviewed these obstacles to ensure that the works of development projects are carried out expeditiously in the coming days.

Citing low expenditure capacity amid slow revenue collection, the government has downsized the budget for this fiscal year by 12.62 percent to Rs 1.530 trillion. In the revised estimation, the government has projected to spend 88.84 percent of the actual regular expenditure worth Rs 1.141 trillion, while it has estimated to spend 84.13 percent of Rs 302.07 billion under capital expenditure and 87.39 percent of Rs 307.45 billion under financial management. This situation paints a bleak picture of the state of our economy. As capital expenditure is key to giving vibrancy to the economy, the government must explore ways to expeditiously implement development projects. Making adequate preparations before allocating a budget for development projects, expediting the tender process, reducing bureaucratic procedures related to development projects, and addressing issues that have caused delays in the execution of donor-funded projects could be the major steps towards addressing this situation.

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