Sunday, December 16, 2018

Government fails to improve budget spending capacity

The stable and strongest government – ever since decades – of Prime Minister KP Sharma Oli failed to boost development works across the country like earlier unstable governments. The Oli government has not only failed to invest in capital formation but also improve its spending capacity by the end of five months of the current fiscal year 2018-19.
According to Financial Comptroller General Office (FCGO), the government has managed to spend merely 12.59 per cent of the total budget allocated under capital expenditure in the first five months of the current fiscal year. "Of the Rs 313.998 billion allocated for capital expenditure for the current fiscal year 2018-19, capital spending stands at only Rs 39.51 billion as of yesterday."
The government has spent Rs 250.5 billion as recurrent expenditure during the five months. The recurrent expenditure is basically spending of the government on non-capital formation programmes like salaries of government staffers, social security and other expenses. "The recurrent expenditure in the first five months of fiscal 2018-19 stands at 29.63 per cent of the total allocated budget worth Rs 845.4 billion," the FCGO report reads, adding that the government has been able to spend only 13.98 per cent or Rs 21.7 billion on financing till mid-December out of the total allocated budget of Rs 155.7 billion.
Of the total Rs 1.31 trillion budget for the fiscal year 2018-19, the government’s total expenditure stands at Rs 311.8 billion or 23.71 per cent.
Inefficient system, various expenditure controlling mechanisms and the failure of the government to introduce effective policies to expedite development works led to low capital expenditure. Low budget spending will pull the economic growth not only for this year but also for the years to come as the capital expenditure in development works will help capital formation in future that will lead to the economic growth and employment creation.
On one hand the government has failed to spend, but on the other, it has been able to mobilise Rs 352 billion in the first five months of the current fiscal year 2018-19, which is 37.25 per cent of the total revenue mobilisation target of Rs 945 billion for the entire fiscal year. The low spending and high revenue mobilisation will help bulge the government coffer, which is not a good sign for the economy like Nepal that needs billion of doller in spending in infrastructure to graduate to middle income country by 2030.

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