MONEY»
Budget crunch
AUG 21 -
The Ministry of Physical Planning and Works (MoPPW) is struggling to initiate projects for road expansion and maintenance in the Capital and other municipalities: It needs annual budget allocation.
Usually, ministries plan and disburse budget for development projects. But, the advance budget (a stop-gap arrangement) does not allow for spending more than one-third of the previous year’s expenditure. Lack of full budget means no fund for new projects.
The expenditure by government agencies and employees are an important source of income in rural areas. Lack of a full budget is affecting rural economy.
A team of Ministry of Finance led by Finance Secretary Rameshwor Khanal met Speaker Subhas Nembang on Friday and urged him to bring out the budget by Sept. 26, or lese the country would face “adverse situation.”
The delegation also proposed forming an all-party committee for political consensus on the content of the new budget so that the new government presents the budget on time.
Officials from other ministries also met Finance Minister Surendra Pandey the same day to warn him, among other things, of the implications of budgetary stalemate. There are widespread concerns that lack of funds will affected various government programs, including the Kathmandu Sustainable Urban Transport Project, a US$ 20 million project for addressing public transportation system in the Capital. “No work on the project has started despite aid agreement between Nepal and Asian Development Bank (ADB),” said a government secretary.
MoPPW is trying to cover the cost of the design work of the project by borrowing money kept under other heads, said Tulasi Prasad Sitaula, joint secretary at the MoPPW.
According to MoPPW officials, there is no shortage of resources for the big and P1 projects (government’s top priority projects). But they are hesitant to spend money on lesser projects as there is uncertainty on whether the fund will be allocated by the full-fledged budget. This has stalled work on road expansion and maintenance in Kathmandu valley and other municipalities. Work on 2000 other small roads under the head of “Gradual Central Road” whose budget ranges from Rs. 50,000 to Rs. 1.5 million has also stalled.
Government offices that deal with development work are not sure whether they should call tender on certain projects. “The allocated one-third budget is not enough for calling tender,” said Purna Kadariya, secretary at MoPPW. During the meeting with the Finance Minister, secretaries of various development related ministries urged MoF to ascertain the tender amount.
Even the government’s three-year interim plan (2010-2013) is now feeling the pinch ever before it gets under way. MoF says it is not sure when the projects identified by the new interim plan will be launched at all. “We had plans related to urban development and drinking water in some municipalities, for example,” said secretary Khanal. “Our homework for construction of hospitals and several schools under the three-year plan is also getting delayed.”
The government was planning to grant resources to newly approved four universities—Far-west, Surkhet, Nepalgunj and Agriculture University. “We had planned to provide resources but the delay in the budget is hampering work,” said Khanal.
Mid-High Highways and Kathmandu-Tarai Fast Track were two development projects that stood out last year. Now, with no full-fledged budget these two projects will likely be hit.
MoF says Mid-Hill Highway, for which the government has already awarded a multi-year contract of Rs 2 billion, may also be hit by resource crunch. The project needs additional budget. “The Rs 60 million that can be spent on fast-track as per the advance budget may not be adequate,” added secretary Khanal.
The private sector is as confused. The full-budget and tax rate are being scanned by the private sector. Businessmen complain their plans are being affected due to lack of a full-fledged budget. Vice president of the Federation of Nepalese Chambers of Commerce and Industries Suraj Vaidya said the business community is facing hardship due to uncertainty in various investment-hungry areas. “We were hoping, for example, there would be new investments on power sector which would have given a huge relief to the industries. But that hasn’t happened yet.”
Posted on: 2010-08-22 09:43
Headlines
Advertisements
