Govt sitting on cash pile due to slow capital expenditure

KATHMANDU, APR 30 -

The government will be left with 72 percent of the capital budget to be spent within the last three months of the fiscal year as expenditure has been slow.

According to the Finance Ministry, capital expenditure amounted to Rs 18.7 billion, or 28 percent of the budget allocation, as of mid-April. The government has earmarked Rs 66.13 billion under the capital budget this fiscal through a recently introduced “adjusted full budget”.

Despite consistent poor capital expenditure in the earlier months of the fiscal year, the government increased the capital budget by Rs 16 billion under the assumption that expenditure would pick up in the last trimester.

However, expenditure has not risen substantially in the first month of the trimester, as shown by the increased amount stuck in the government’s treasury in mid-April due to continued poor expenditure compared to revenue collection.

The resources parked in the treasury soared by Rs 15 billion to Rs 56.95 billion in mid-April from the previous month, according to the Finance Ministry. However, a Finance Ministry official said that the increased amount was due to higher revenue collection, particularly income tax, in the ninth month of this fiscal.

Taxpayers pay the second instalment of their income tax in mid-April. Usually, they have to pay 40 percent the tax in mid-January, 30 percent in mid-April and the rest at the end of the fiscal in mid-July.

“Compared to revenue collection, we failed to spend well which resulted in a huge amount stuck in the government coffers,” said the ministry official. The unspent money is more than double of what the government held during the same period last year, which amounted to Rs 27.17 billion.

Former vice-chairman of the National Planning Commission Jagadish Chandra Pokharel said that expenditure usually soars in the final months of the fiscal in the country, and after payment has been made, the picture could be different. However, he said that the entire allocation was unlikely to be spent.

Pokharel said that delays in introducing the budget and its approval by Parliament and launching of new projects without adequate homework resulted in poor capital expenditure over the last few years.

Source: The Kathmandu Post