Capital expenditure is an unlikely govt baby
Delayed budget presentation and frequent change of the government have taken a toll on the country’s capital expenditure. With only two-and-a-half months remaining in the current fiscal, the government has only been able spend 25 percent of the total capital expenditure.
Nepal Rastra Bank (NRB) statistics show that the government spent just Rs 33 billion of the total allocated capital expenditure of Rs 129 billion. However, regular expenditure stands at Rs 104 billion during the period.
With slow development expenditures, there are doubts whether the government will be able to utilise the maximum of the allocated capital expenditure budget. “Capital expenditure usually soars in the last quarter beginning mid-April,” said Dinesh Devkota, officiating vice-chairman of National Planning Commission. “We are hopeful that most of the allocated budget will be spent, as development project works are underway.”
Because of the government’s failure in spending budget promptly, the government treasury has swollen to Rs 17 billion as of the ninth month of the current fiscal. The figure was at Rs 12 billion in the seventh month.
Whenever there is a delay in the budget presentation or endorsement, development expenditure has always been low. Thanks to a frequent change of the government and the parties’ failure to forge consensus, the last three years saw the annual budget either being presented behind the schedule or endorsed late by the Parliament and the government failing to meet the capital expenditure target.
In 2008-09, the Maoist-led government brought the annual budget late and capital expenditure remained at Rs 73 billion, against the target of Rs 91 billion. Likewise, in 2009-10, the capital expenditure remained at Rs 89 billion against the target of Rs 106 billion. The government has revised the capital expenditure target at 110 billion this year through the mid-term review of the budget. The earlier target was Rs 129 billion. “As there has not been a second assessment about the probable size of the capital expenditure after the mid-term review, we stick to the possibility of spending the revised amount,” said Bodh Raj Niraula, joint secretary of the Finance Ministry.
The government releasing extra amount to the Nepal Oil Corporation for oil import will also help it to show higher capital expenditure this year. “I think the revised target is achievable due to government’s loans to NOC although it is not a productive investment,” said Rameshwor Khanal, former finance secretary.
Apart from delay in the budget presentation, delay in getting programmes endorsed by the National Planning Commission (NPC) also affected the overall capital expenditure. There were several programmes and projects yet to be the approved by the NPC until recently. After the budget presentation through ordinance on Nov. 20, 2010, the finance ministry had told all the ministries to get their programme endorsed by the NPC by Dec. 6, 2010. “Almost all projects have been approved by the NPC,” said Devkota of NPC.
Given the slow capital expenditure, it is not sure whether the government will stick to the budgetary provision that projects will not get more than 40 percent budget in the fourth quarter and 20 percent in the last month. “We are committed to the budgetary provision, but will be flexible on case-by-case basis,” said Niraula “So far, no project has sought our help to release more than 40 percent budget.”
Former finance secretary Khanal also said the government should not adopt a strict approach to implement this provision as long as it benefits the country.
Posted on: 2011-04-23 09:47
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