70 percent capital expenditure in last two months of FY14

70 percent capital expenditure in last two months of FY14

Continuing the trend of spending a major portion of the capital budget in the final months of the fiscal year, 70 percent of the expenditure took place in the last two months of 2013-14, according to the Finance Ministry.

Over the last six years (FY 2008-09 to FY 2012-13), about three-fourths (73 percent) of the capital expenditure took place in the last trimester, thanks to a delay in budget presentation and its endorsement, according to the ministry.

“This trend didn’t change even in the last fiscal year when the budget was presented in time,” said Finance Ministry Spokesperson Ram Sharan Pudasaini. Ministry officials say the habitual spending rush in the end of the fiscal year has led to low quality of work.

According to the ministry, it took four months to get all the programmes and projects approved by the National Planning Commission ( NPC ) which subsequently delayed the contract awarding process.

The lack of sand and aggregates, and inadequate preparations before budget allocation for projects also contributed to low and late spending, according to the ministry.

The overall capital expenditure in the last fiscal year stood at Rs 63.7 billion — 84.9 percent of the cash budget of Rs 75.03 billion. The total capital budget was Rs 85.1 billion, but Rs 10 billion was to be paid to contractors through direct payment from donors. The trend has resulted in the dumping of the resources in the government treasury. In the last fiscal year, the government treasury held a surplus of Rs 40.72 billion, the ministry said. “The problem is not the resources, but weak management, lack of coordination among ministries and the lack of technical capacity utilisation,” the ministry said in a assessment.

Even this fiscal year, the situation has not improved although the budget was presented in time. Ministries have forwarded just 90 first priority (P1) programmes and projects to the NPC for its approval as of Friday, according to the planning body. There are 339 P1 projects.

NPC has to approve the P1 projects, while ministries themselves okay P2 and P3 projects.

The Finance Ministry had told the ministries to get their P1 programmes and projects approved by NPC August 10. But only around 11 percent of the projects had been approved until August 25.

Finance Minister Ram Sharan Mahat last week again instructed secretaries from all development ministries to get the P1 projects approved within two weeks.

NPC Joint Secretary Puspa Lal Shakya said the ministries have assured they would forward all the programmes and projects for approval by August-end.

However, Pudasaini doubts if the ministries would do so. “The current trend suggests it will take time,” he said, adding although procedural delays in the approval process does not bar the tendering process, there is no tradition of inviting tender without NPC ’s approval.

NPC has the authority not to approve certain activities under the programmes or projects which may create difficulties in the tender process. “The best solution of this procedural delay is to introduce early budget and set a tradition of getting NPC ’s approval before the budget presentation,” said Pudasaini.

Source: eKantipur