It is no wonder that the development budget has always been underutilised in Nepal. This is a bitter reality that continues to haunt for years with negative implications on economic growth. Every time the concerned minister and ministry promise to increase the spending of capital budget, they appear unable to overcome various bottlenecks that come in the way of smooth implementation of capital budget. Quite the contrary, the recurrent expenditure often soars to our dismay. The government has spent only Rs. 50.82 billion (14.4 per cent) earmarked for the development sector in the first six months of the fiscal year 2020/21. On the other hand, the recurrent expenditure and financial management amounted to Rs. 342.36 billion (36.08 per cent) and Rs. 22.57 billion (13.06 per cent), respectively. Current expenditure has increased by 10.56 per cent while capital expenditure has gone down by 19.6 per cent. The dismal performance in the spending of development budget has resulted in the slow pace of vital projects expected to boost basic infrastructure and jobs.

This time the COVID-19 pandemic led to the low capital spending, as rigorous health safety measures were applied at the work sites. But the authorities insist that key development works did not come to a halt during the lockdown enforced to prevent the virus spread. In order to mobilise the higher amount of capital budget, the government supported projects to go ahead applying the health protocol in the time of medical emergency. However, many structural shortcomings can be traced in this regard. One oft-quoted factor is the absence of robust coordination among the concerned agencies. They fail to cooperate with others for the judicious and transparent distribution and expenditure of capital budget.

During the meeting of the mid-term review of the current budget spending, Minister for Finance Bishnu Prasad Paudel has admitted that concrete steps were not taken immediately to sort out the problems which hamper the budget spending. He mentioned the lack of timely and coordinated approach from the inter-ministerial bodies behind the lacklustre allocation of capital expenditure. To stem this perennial economic disease, the authorities should not only work in a transparent manner but they should be held accountable for the poor spending. There has been a tendency of making non-budgetary demands and additional disbursement demands and showing indifference to financial procedures and norms. It is no secret that there is always political pressure for transferring budget and amending programmes aimed at implementing pork-barrel projects to please the given constituencies and voters.

In order to end such anomalies, the finance ministry should not delay in formulating procedures, criteria and directives for the budget implementation. It is a matter of satisfaction that the ministry has assured of paying attention to timely budget surrender and transfer, justification-based programme amendment, in-depth preparation of new budget and revision of foreign resource programmes, according to the news report of this daily. In addition to improving expenditure modality, ministries should jointly devise and apply the working procedures. At the same time, there should be different ceiling for the multi-year contracts. The contractors should not be awarded the projects without their proper feasibility study. Fiscal ethics, good governance and rule of law are a must for the creative and productive spending of budget.