'Capital spending warrants policy and structural reforms'

By Hemant Joshi, Lalitpur, Nov 23: At a time when the government has claimed that it was working actively to improve the national economy, the stakeholders concerned have expressed worry over low capital spending.     

Even a study has shown that capital spending could not be increased unless policy and structural reforms were carried out. The study done based on the first four-month implementation of the budget for the current fiscal year, 2024/25, revealed that the reform programmes launched through the budget were not enforced, which impacted negatively on budget spending and development infrastructures.     

The study was conducted jointly with the Confederation of Nepalese Industries (CNI) and the Society of Economic Journalists Nepal (SEJON).     

The study report further showed the projects were included in the budget without any preparation; there was an ownership problem on the budget as it was brought by the previous government; and reform programmes stated in the budget were not enforced. These faults showed dented figure on capital spending.     

Although the 16th periodic plan has stipulated the need for some Rs 2000 billion investment per year in infrastructure, the budget allocated was only Rs 300 billion in this sector this year which too was not enforced.     

Out of seven headings under the infrastructures in the current budget, only one heading was implemented, while four others were partially implemented and two have zero progress. It was divulged in a study report 'Budget Watch' released on Friday.     

At the programme organized to discuss report findings, Vice Chairman of the National Planning Commission, Dr Shiv Raj Adhikari, said coordination and collaboration among all ministries and their subordinates was essential to increase capital spending.     

"We've intensified discussion on how the hassles and obstructions relating to project implementation can be wiped out. Forest clearance, procurement and financial management were discussed rigorously," he shared.     

He suggested listing all projects for the budget before Chaitra month, determining resources beforehand, priority to the undergoing projects and strict implementation for project enforcement.     

Chief Executive Officer of the Investment Board, Sushil Gyawali, informed that in total Rs 11200 billion investment was required in the infrastructure sector for five years as per the 16th periodic plan, among which Rs 3500 is to be borne by the government and the remaining by private sector.     

He blamed the non-implementation of devolution of power and cooperation among three-tier of governments. "If all governments are assigned clear responsibilities and work plans as per federal system, it would help clear hurdles," Gyawali said, admitting slow infrastructure development.     

Joint Secretary at the Ministry of Physical Infrastructure and Transport, Krishna Raj Panth, said there was random allocation of infrastructure projects, scattering resources. Even federal lawmakers pick minor projects that further foment the trend of scattering budget. The capital spending is not satisfactory because the efforts for reforming public procurement were not realized, he argued.     

Vice Chairman of CNI, Birendra Raj Pande, informed that the discussion was on to prioritize infrastructure development through the investment summit. The financial tools such as green bonds and infrastructure bonds should not be limited to budget but translated into action, he added. (RSS)