Government scrambles to speed up spending as fiscal year end nears

- RAJESH KHANAL, Kathmandu

Jun 26, 2019-

The government has transferred more than Rs5 billion to new budgetary headings as it scrambles to speed up spending at the tail end of the fiscal year. Expenditure usually gets bunched up during the period mid-May to mid-June as the government scrambles to use up unspent funds with the fiscal year drawing to a close.

Budget transfer means moving funds from one assigned programme or project to another. In many cases, government agencies seek to adjust budgetary allocations after being unable to spend earmarked money.

Finance Ministry records show that most of the transfers to non-budgetary headings were made under the title of emergencies of general administration and development programmes. A large amount of funds was transferred to pay motivational allowance to government officials and overtime wages to customs officials.

Of the total amount, Rs55 million was spent on official visits to foreign countries. Rs30.95 million was spent during President Bidya Devi Bhandari’s state visit to China while Rs21.28 million was spent for Prime Minister KP Sharma Oli’s visits to Vietnam and Cambodia.

The ministry approved the transfer of Rs1 billion to the Rani-Biratnagar-Itahari-Dharan road expansion project. Rs396.50 million was transferred to provide relief to conflict victims and family members of missing people.

Almost every year, the ministry has been allowing large budget transfers towards the end of the fiscal year. In the past four months, the ministry allowed budget transfers totalling Rs47 billion. This year, the ministry issued a directive restricting budget transfers from mid-June to mid-July, the last month of the fiscal year.

The Office of the Auditor General pointed out major flaws in spending under non-budgetary headings by the government in its 56th annual report for the fiscal year 2017-18.

The report shows that the Finance Ministry had allowed transfers totalling 19 times over the limit. The Appropriation Act 2017 bars the government from making transfers of more than 10 percent of the budget allocation.

Irregular budget transfers have raised concern among donor agencies.

World Bank officials have urged the government to check the tendency of virement stating that it might not help serve the purpose of financial discipline.

Uttar Kumar Khatri, spokesperson for the Finance Ministry, said the government could transfer funds from headings where the allocation was not being utilised under the Finance Act and Appropriation Act. “The ministry also needs to reach a decision when the allocation falls short due to an unexpected rise in expenses under a particular heading,” said Khatri, denying that such a move constituted violation of fiscal discipline.

Keshab Acharya, who served as an economic adviser to the Finance Ministry, said the large budget transfers affected the government’s aim to maintain fiscal discipline.

Acharya said the prevailing practice of budget transfers raised questions about the efficiency of the financial administration run by the government with a two-thirds majority. “It reveals the irresponsibility of the authorities that revise their own estimates of the budget allocated via the government red book,” he said.

Published: 26-06-2019 09:41

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