Government sitting on Rs 60b in unspent cash

KATHMANDU, JUN 11 -

Despite government claims of rising capital expenditure in the latter months of the fiscal year, swelling cash reserves in its coffers reflect a poor expenditure pattern. According to the Finance Ministry, the government had Rs 60 billion unspent in its strong box right before the closure of the 11th month of the current fiscal year.

The money left in the treasury has consistently remained at a level higher than Rs 50 million in the last three months. The stash reached a high of Rs 60 billon this year due to planned development projects not being implemented and pending payments to contractors.

Speaking at an interaction on Monday, finance secretary Shanta Raj Subedi admitted  that this had raised a question over the country’s development expenditure . However, the government hopes to spend 90 percent of the capital budget. Meanwhile, questions have been raised if the hurried spending will not affect the quality of work.

According to the ministry, the government has spent just 38 percent of the total allocated budget as of the final week of 11th month of this fiscal.

The government has earmarked Rs 66.13 billion under the capital budget through a recently introduced “adjusted full budget”.

Given that spending the development budget has been a major challenge due to delays in budget presentation, programme approval and awarding of contracts over the last few years, Finance Minister Shankar Koirala said that a mechanism would be developed to ensure shortening the deadline of budget authorization and programme approval. “We have been discussing with the National Planning Commission and the Financial Comptroller General’s Office in this regard,” he added.

Meanwhile, the Finance Ministry has predicted that inflation will remain in the double digits this year. “It is expected that price rise will remain at 10.5 percent this year,” said finance secretary Subedi.

The government has hoped to attain 4 percent economic growth this year citing favourable weather conditions and expansion of the service sector in the latter months of this fiscal. The Central Bureau of Statistics has estimated a growth rate of 3.56 percent.

The ministry also said that revenue collection has been impressive which would allow the government to keep a higher growth rate in the next fiscal year’s budget.

According to the ministry, the government’s intake stood at Rs 234.45 billion as of the 11th month of this year which is Rs 8.15 billion higher than the target. “Revenue collection recorded a 23.3 percent growth compared to last year against the target of 19 percent,” said Finance Minister Koirala. “We can see a revenue growth rate of 35 percent with a revision of the tax rate next year.”

No pet projects in next budget

Finance Minister Shankar Prasad Koirala announced on Monday that the government would not incorporate politically debatable pet projects in the budget for the next fiscal year.

Administrations led by political parties often launch fancy programmes as a populist measure to please the general masses. “We will discontinue such politically tagged programmes that are not benefiting the people,” said the finance minister at an interaction with economic journalists. “There is no possibility of the current government introducing new politically tagged programmes.” Koirala added that the new budget would not be very ambitious, and that it would be development centred.

When asked if his revenue growth target of 35 percent would not encourage imports, Koirala said the government was confident about attaining the projected growth rate with the normal level of imports. “But we cannot stop the natural growth of imports,” he added. On a possible raise for government employees, he said the government was not in a position to say anything at the moment.

Source: The Kathmandu Post