Tuesday, July 25, 2017

Lawmakers concerned over last minute capital expenditure

The lawmakers suggested the government to implement a carrot and stick approach to effectively implement the budget and boost capital expenditure.
Speaking at a meeting of the Finance Committee under the Legislature Parliament today, they also said that the quality of development projects should not be compromised while expediting the spending.
Likewise, the inability of large infrastructure projects to utilise the funds allocated for their development has been cited as one of the major reasons behind the low level of capital expenditure in the last fiscal year.
"The capital expenditure used to outpace the recurrent expenditure until 1994 but that trend has reversed in recent years with capital expenditure remaining at the lower end," former finance minister and leader of CPN-UML Bharat Mohan Adhikari, on the occasion, said, suggesting to pursue reward and punishment approach.
He also proposed to hold regular review meetings with the big ministries that have the highest budgets. "The ministries, secretaries and project chiefs should take responsibility, if there is no progress in project implementation,” he said, adding that the quality of the development projects is also equally important as is the implementation of the budget.
"The practice of spending at the last month or at the last minute of the fiscal year continued in the last fiscal year also,” said a lawmaker Shakti Basnet. "The continuity of this practice raises concern whether the budget has been utilised in a proper way and has delivered results,” he said, adding that lack of proper management of workforce has also resulted into delay in project implementation.
Another lawmaker Dil Bahadur Sah, on the occasion, said that the government should take action against those responsible for the delay in the implementation of development projects. "The government should increase monitoring and oversight of development projects," he said, suggesting to take action on project chiefs, contractors or whoever is responsible in delaying projects till the last moment.
Likewise, lawmakers also said that the payment to the contractors should be made on time. "There are reports that huge amount of checks for payment have been made in the last week of the fiscal year," they said, adding that the payment of the previous quarter should be made by next quarter.
Saying that ‘a sense of accountability’ must be inculcated among the stakeholders responsible for project implementation, they also asked the government to build capacity to implement the budget. "The capacity of the bureaucracy must be developed to ramp up capital spending," they suggested.
Responding the lawmakers at the meeting,  joint secretary at the Finance Ministry Kewal Prasad Bhandari, said that the low capital expenditure is the result of lack of spending capacity. According to him, payment of checks worth Rs 43 billion was issued on the last day of the last fiscal year.
The government has earmarked large amounts of money for the implementation of large infrastructure projects without adequate preparations, according to the Financial Comptroller General’s Office, the government agency which oversees the government’s expenditure against the budget. As a result, these projects were unable to use the funds leading to poor capital spending in the fiscal year 2016-17.
The Finance Ministry had allocated substantial funds to projects like Kathmandu-Tarai Expressway, Budhi Gandaki Hydroelectric Project, Nijgadh International Airport, Babai Irrigation Project, Rani Jamara Kulariya Irrigation Project and different transmission line projects without planning how to execute them, Financial Comptroller General Rajendra Prasad Nepal informed the lawmakers.
In the last fiscal year, the government had allocated Rs 10 billion for the Kathmandu-Tarai Expressway. "But it has not yet moved an inch ahead,” said Nepal.
"Likewise, Rs 2 billion had been allocated for Nijgadh International Airport, but without a modality to implement the project, the budget went unspent," he said, adding that the Budhi Gandaki, Bheri-Babai Irrigation, Rani Jamara Kulariya Irrigation and different transmission line projects did not move ahead as land acquisition could not be completed To improve capital expenditure, the government must allocate a budget to projects only after proper homework," he added.
Capital expenditure during the last fiscal year which ended on July 15 stood at only 65 per cent of the total allocation. Out of the Rs312 billion allocated for capital spending, only Rs 202.7 billion was spent.
The manner of capital expenditure was also questioned as almost 36 per cent of the spending took place in the last three weeks of the fiscal year.

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