FinMin asks secretaries to forward action plans on reducing arrears

KATHMANDU, AUG 06 -

Finance Minister Shankar Prasad Koirala on Monday asked the secretaries of various ministries to forward their action plans on reducing arrears within the next 15 days.

According to the 50th report of the Office of Auditor General (OAG), arrears from advance payments stand at Rs 14.7 billion as of 2011-12.

Koirala, who also heads the “committee to implement report of constitutional bodies”, asked the secretaries to set a target of reducing the arrears by 20 percent within mid-September, 50 percent by mid-March, 100 percent by mid-June.

In the absence of a parliament to discuss issues related to arrears, the government formed the committee to take measures to reduce the arrear size.

The Finance Minister gave such an instruction to the secretaries during the second meeting of the committee held at the Finance Ministry . He asked the secretaries to form a team to look after the issue of arrears within the ministry, saying that the ministry was ready to provide necessary resources for the purpose.

During the meeting, Chief Secretary Lilamani Poudel said the advance payments made to contractors have been a big source of corruption and stressed that it should be stopped.

Poudel was responding to complaints of secretaries about the categorisation of the advance payments as arrears. They said advance payments should be categorised under a different heading.

According to Poudel, advance payments made as “mobilisation fund” before the start of the work have encouraged contractors to invest the money in real estate and subcontract the projects to others at reduced costs.

“Contractors should be asked to take loans from banks to start the work instead of providing the mobilisation fund,” said Poudel.

“We award contracts based on the financial strength of contractors. The contractors’ tendency of not starting work before receiving the advance payment should be stooped.”

Source: The Kathmandu Post