The government’s development expenditure hit a five-year low in the last fiscal year despite a whopping rise of Rs58.03 billion in the spending in the last one month.

Marred by four-and-half-month-long Indian blockade and slow progress in post-earthquake reconstruction, the overall capital expenditure stood at just 56.30 percent.

It is ironic that in the year declared as the “Budget Implementation Year”, the government was able to spend only Rs117.59 billion out of the total allocation of Rs208.87 billion.

According to the Financial Comptroller General Office (FCGO), 30 percent of the capital budget was spent in the last seven days (July 9-15) of the fiscal year, while half of the spending took place in last month.

“The capital expenditure figure in the final month was higher this fiscal year compared previous years, when 20-25 percent spending used to take place in the last month,” said Rajendra Prasad Nepal, Financial Comptroller General.

He said most of the cheque issuances from the offices under the FCGO takes places in the final trimester every year and it was no different last year.

A Finance Ministry study shows around 60-70 percent of the capital expenditure has been taking place in the last trimester in recent years.

The FCGO said the expenditure figure has not included direct payment that donor agencies provide to contractors—whose contribution usually remains at around 10 percent of the total expenditure.

However, even if the 10 percent is added, last year’s expenditure figure still remains the lowest in the last five years.

When the budget for the last fiscal year was announced, spending in post-earthquake reconstruction was supposed

to drive the overall capital expenditure, but the delay in setting up the National Reconstruction Authority (NRA) and its inability to expedite reconstruction works resulted in dismal development spending.

Out of total Rs74 billion allocated to NRA, it could release just Rs27 billion at the end of the year. “Even all the released amount is unlikely to be spent,” said NRA Spokesperson Ram Prasad Thapaliya.

For economists, this trend is not surprising. “Obviously, the last fiscal was not a normal

year because of the blockade. However, the lack of project preparedness, delay in awarding contracts and failure to make contractors responsible have been inherent problems that have affected our development expenditure, and the last fiscal was no exception,” said Shankar Sharma, former vice-chairman of the National Planning Commission (NPC).

Reports from various districts suggest constructions underwent rapidly in the last two months of the fiscal year. Experts and government officials admit such quick-fix nature of works coupled with monsoon would result in poor quality of construction. They say when money is released in the last hours, it could also lead to misuse.

“Lately, a trend has emerged in which big projects get unusually huge chunk of resources at the last minute although there remains no possibility of

spending such a big amount

in last moment,” said

Tulasi Prasad Sitaula, former secretary of the Physical Infrastructure Ministry.

“This must be investigated

as there remains chance of

irregularities.”

According to Nepal, higher cheque issuances in the latter months of the fiscal year means constructions have either taken place in the final months or they have been just completed.

During the tenure of the first Constituent Assembly (CA), delayed budget cycle caused by delayed presentation and endorsement were blamed for promoting the trend of late push for capital expenditure.

The budget has at least been presented in time after the

election of the second CA;

however, the trend of spending in the latter months of the fiscal year continues.

Sitaula said the tendency of a single contractor holding multiple projects at the same time and allocating a huge amount of budget in projects where spending cannot be possible also affected capital expenditure.

“The budget of such projects are not allowed to transfer to other projects that are performing better as early as February,” said Sitaula, adding this resulted in many projects struggling to expedite works due to lack of timely resources.

He said about one third of the budget is allocated in projects where spending cannot happen.

Another anomaly resulted by late spending is the budget is allocated to consumer committees which in turn re-contract the works to the contractors. “In such dealings, consumer committees usually led by ‘cadres of political parties’ take commission while allocating the works to contractors,” said Sharma.