FM blames ministries for low capital spending
KATHMANDU, FEB 09 -
Finance Minister Shankar Prasad Koirala has blamed ministries responsible for development work for low capital spending despite timely budget presentation.
Koirala said his ministry did all that was needed to expedite capital spending. “We presented the annual budget on time, made every effort for early approval of programmes and contract awarding,” said Koirala at a press meet here on Friday.
As of the six month of this fiscal year, only 13 percent (Rs 11.47 billion) of total capital budget allocated has been spent. Such a poor capital expenditure despite timely budget presentation has raised questions over the government’s capacity to spend.
The finance minister said it has been necessary to associate capital expenditure with the performance review of ministry officials to ensure better expenditure. “As the spending procedures take a longer period, early budget presentation may also help,” said Koirala.
Koirala, however, was upbeat about the prospects of capital expenditure in the second half. In the last 23 days from mid-January, Rs 2.25 billion in capital budget was spent, according to the minister . It means the expenditure has reached Rs 13.71 billion as of February 6. “The second half looks better,” he said.
Finance Secretary Shanta Raj Subedi said the lack of willpower among the implementing government agencies was the major reason behind the poor capital expenditure. “We asked the ministries to complete awarding contracts within mid-December, but all contracts have not been awarded yet,” he said.
Subedi stressed on the need for early budget presentation to start spending the capital budget from as early as September instead of the second half of the fiscal year.
As the government struggled to spend the capital budget, revenue collection has taken a beating in the first half. The government missed the revenue target by Rs 4.73 billion over the review period.
However, the finance minister claimed the revenue growth exceeded the annual growth target of 19.7 percent. “Based on this fact, we are hopeful the revenue collection target will be met this fiscal,” said Koirala.
He also expressed hope the economic growth target of 5.5 percent will be met. “Based on the good performance of the agriculture sector and the election held this year, economic growth rate will be at least near to targeted figure if not met,” said Koirala.
Finance Secretary Subedi termed inflation and trade deficit as the two biggest problems facing the economy. “It has been a trend over the last several years that inflation rises in the election year due to high outflow of cash in the market,” he said.
“The finance ministry is holding discussions with the central bank to control inflation,” he said. As of mid-December 2013, inflation remained 10.4 percent.
Chief Economic Advisor at the Finance Ministry Chiranjeevi Nepal said the private sector is still awaiting economic policies to be adopted by the next government. “It is necessary to clarify the private sector about the economic policy to attract investment,” he said.
Source: The Kathmandu Post
