Tuesday, 28 September, 2021

Boost Capital Spending

Notwithstanding the unprecedented impacts of the protracted COVID-19 pandemic on the overall national economy, the government is determined to achieve a seven per cent economic growth target set in its budget for the current fiscal year. In the past, most development projects would not be executed in a time-bound and effective manner owing to various lapses. The trend of spending capital budget was not so encouraging. The country was able to utilise only 64.69 per cent of Rs. 352.9 development budget in the last fiscal year 2020/21. But the recurrent expenditure was 89.7 per cent of Rs. 948.9 billion and 58.4 per cent financing was mobilised out of a total Rs. 172.7 billion. The present government seems to have learnt much from the past as it is in the process of developing a robust mechanism for monitoring and evaluating the implementation of development projects. The mechanism will also facilitate for smooth and speedy execution of such projects.

The Ministry of Finance has aimed at mobilsing at least 10 per cent of the capital budget every month so as to meet the growth target and complete the development projects within the stipulated timeframe. As two months of the current fiscal year have almost passed, the government will have to mobilise about 80 per cent of its capital budget during the current fiscal year to achieve its target. Such a target-oriented budget spending is expected to end the bad practice of mobilising a major chunk of the development budget at the eleventh hour. With this tendency, there were high chances of the budget being misused. Through its Replacement Bill 2021/22, the government has lately scrapped various programmes that wouldn’t have any impact on people and the economy but would exert an extra pressure on the state coffers.

In its budget unveiled through an ordinance, the previous government had proposed various plans and programmes without managing the required financial resources. Speaking at a post-Bill discussion organised at the Ministry of Finance on Sunday, Finance Minister Janardan Sharma said that the programmes announced just for their sake were cancelled. According to the news carried by this daily, only 0.52 per cent capital and 4.5 per cent recurrent budget could be mobilised during the first two months of the current fiscal year because the present coalition government wanted to replace some programmes announced by the erstwhile government to save resources. It has now downsized the budget by Rs. 15 billion to Rs. 1632.83 billion from Rs. 1647 billion.

The government has also come up with a plan to utilise the Nepal Electricity Authority (NEA) engineering to carry out Detailed Project Reports (DPR) of the development and infrastructure projects, including hydroelectricity projects, and strengthen its capacity to meet the growing power demand. It is going for the EPCF (Engineering, Procurement, Construction and Financing) model in larger infrastructures to reduce time and cost overrun. It is sad to note that most of the infrastructure and other development projects in the country, including the national pride projects, have not completed on time. As a result, such projects have ended up increasing their total costs. The government must adopt appropriate plans and strategies to prevent this situation. It should also hold the concerned departments, offices, construction companies and other stakeholders accountable if they fail to meet the work deadline.