Sunday, February 28, 2016

Government needs to spend around one-and-a-half billion development expenditure every day

The government has a challenging task of spending around one-and-a-half billion of development budgets every day to meet expenditure targets of the budget for current fiscal year 2015-16.
According to Financial Comptroller General's Office (FCGO), the government has been able to spend only Rs 21.51 billion, or just 10.30 per cent of development expenditure, by February 25. Though only 135 days are remaining in the fiscal year, which ends in mid-July, the government is still to spend Rs 187.35 billion development expenditure. It means that the government will have to spend Rs 1.39 million ever day, if it wants to meet the target of development spending.
Finance minister of the erstwhile government led by Sushil Koirala, Dr Ram Sharan Mahat had allocated Rs 208.87 billion for the development spending for the current fiscal year 2015-16.
However, the post-earthquake dilemma and Indian blockade after the promulgation of Constitution on September 20, which created shortage of fuel, made the government technically unable to spend any of the development expenses.
Under pressure to up spending, Office of the Prime Minister and Council of Ministers on Friday directed secretaries of all the ministries to accelerate development spending. In the meeting chaired by prime minister Khadga Prasad Sharma Oli, chief secretary Som Lal Subedi directed secretaries of concerned ministries to report him about development expenses made now onwards on a fortnightly basis, according to a secretary who attended the meeting.
“Though the chief secretary has directed us to report him every fortnight, it is very difficult to increasing development spending,” the secretary said, adding that the situation has not normalised even though the blockade has been lifted. "Development projects are still facing shortage of fuel."
Mahat had presented a budget of Rs 819.47 billion for the current fiscal year 2015-16 on July 14, 2015. He had allocated Rs 484.27 billion for recurrent expenditure like salary payment of civil servants, grants to local bodies and interest payment; Rs 208.88 billion for capital expenditure like spending on civil works and purchase of land, building, furniture, vehicles, plants and machinery; and Rs 126.32 billion for financing provision like lending to state-owned enterprises and principal repayment.
He had also allocated Rs 91 billion for reconstruction of structures damaged by the devastating earthquakes of April and May. But the incumbent government and National Reconstruction Authority (NRA) have already declared that the reconstruction works will only start after April 25, marking the first anniversary of the devastating earthquake.
The government is under tremendous pressure to kick-start stalled development projects as the fiscal year is coming to an end in just four-and-a-half months.
Earlier, on Thursday, ADB president Takehiko Nakao had asked PM Oli and finance minister Bishnu Poudel to accelerate the pace of investment for reconstruction and other development programs in order to achieve economic growth potential of 7 per cent to 8 per cent per annum in the medium term. "Nepal's public capital spending has been low at an average of 3.5 per cent of gross domestic product (GDP) over the last five years compared to the 8 per cent to 12 per cent required to fill the critical infrastructure gap within a decade," he had said.

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