The inability of large infrastructure projects to utilise the funds allocated for their development has been cited as one of the major reasons behind the low level of capital expenditure in the last fiscal year.

The government has earmarked large amounts of money for the implementation of large infrastructure projects without adequate preparations, according to the Financial Comptroller General’s Office, the government agency which oversees the government’s expenditure against the budget. As a result, these projects were unable to use the funds leading to poor capital spending in the fiscal year 2016-17.

The Finance Ministry allocated substantial funds to projects like the Kathmandu-Tarai Expressway, Budhi Gandaki Hydroelectric Project, Nijgadh International Airport, Babai Irrigation Project, Rani Jamara Kulariya Irrigation Project and different transmission line projects, among others, without first planning how to execute them, Financial Comptroller General Rajendra Prasad Nepal told the parliamentary Finance Committee.

In the last fiscal year, the government had set aside Rs10 billion for the Kathmandu-Tarai Expressway. “But in the absence of a modality to execute the project, the funds remained unspent,” said Nepal. The government only assigned the Nepalese Army to develop the project in May, just two months before the end of the fiscal year.

Likewise, Rs2 billion had been allocated for Nijgadh International Airport, but without a modality to implement the project, the budget went unspent.

“The Budhi Gandaki, Babai Irrigation, Rani Jamara Kulariya and different transmission line projects did not move ahead as land acquisition could not be completed,” said Nepal. “In order to improve capital expenditure, the government must allocate a budget to projects only after proper homework.”

House committee member Sakti Basnet said reckless budget allocations to projects without assessing their capacity to spend was the major reason behind the poor capital expenditure.

Capital expenditure during the last fiscal year which ended on July 15 stood at only 65 percent of the total allocation. Out of the Rs312 billion allocated for capital spending, only Rs202.7 billion was spent.

The manner of capital expenditure was also questioned as almost 36 percent of the spending took place in the last three weeks of the fiscal year.

The capital budget is generally used to execute civil works and purchase land, building, furniture, vehicles, plant and machinery, among others.