Budget approval process slow despite timely budget

KATHMANDU, Nov 19:

Though budget for the current fiscal year was announced on time, it took four months for the government to grant approval to all development programs.

Though the Ministry of Finance (MoF) and the National Planning Commission (NPC) had immediately formed a mechanism to fast-track the approval process, it still took four months to grant approval to all programs.

The government had announced to complete the process of approving all development programs within second week of the first month (mid-July to mid-August) of the current fiscal year.

In a latest bid to speed up the implementation of development programs, the MoF had introduced online monitoring of development programs putting special focus on programs with national priority.

As per the government plan, project with investment of more than Rs 150 million will be kept under strict monitoring to ensure effective implementation.
“All programs including national pride projects and highly prioritized programs have been already been approved,” a high-ranking official at NPC, told Republica. “We couldn´t approve all the programs in time as most of our employees were involved in the preparation for Constituent Assembly (CA) election.”

The official, however, said the program approval process was faster this year compared to past years. In the past, the government used to give approvals to the ministries to spend budget programs until third quarter of the fiscal year. The late approval used to impact implementation of such programs leading to low capital spending.

In the last fiscal year, only 80 percent of the capital budget was spent due to lack of full-fledged budget and weak spending capacity of the ministries.
Total capital expenditure during the first quarter of the current fiscal year ending mid-October hovered over R 3 billion, according to the MoF officials.

Finance Minister Shankar Koirala has been saying that capital spending was slow in the initial months of the current fiscal year due to frequent strikes and election preparation process, it will pick up in the coming months.

The government has set a target to achieve economic growth of 5.5 percent in the current fiscal year. However, the target of economic growth can be achieved only if the government increased development expenditures which will ultimately increase the flow of money into the market.

“The private sector will raise investment to support the growth target if the government increases development expenditure. So, we are committed to initiate implementation of development programs by mid-January,” the official added. “The government should maintain harmony between revenue collection and expenditure so as to establish balance in the economy with optimum level of liquidity.”

As per the schedule, all ministries have to complete the process of awarding contracts of development projects by mid-December.

In the absence of balance between revenue and spending, the government had revised down the growth projection last year. Economic growth has squeezed to 3.6 percent last year, down from initial projection of 4.5 percent.

Source: Republica