Infra dev fund to be set up with unspent budget

KATHMANDU, MAR 19 - The government announced on Tuesday that it would be setting up an infrastructure development fund with unspent budget money to provide extra resources to cash-strapped projects over their budget allocations.

The pool’s resources will be made available to infrastructure projects related to road, irrigation and energy, states the government ’s common minimum programme.

As the government has been continually failing to spend budget allocations, particularly the capital budget, a huge amount of unspent budget money has been piling up. The money is usually carried over to the next year.

The government has expected that a sum of Rs 13 billion out of the Rs 85 billion allocated in the capital budget for the current fiscal year will not be spent, according to the Mid-Term Review of the budget.

Likewise, it stated that 93.83 percent of the recurrent expenditure and 96.26 percent of the budget under the financing heading would be spent. For the last several years, the capital budget in particular has not been fully spent, according to the Finance Ministry.

Nirmal Hari Adhikari, under secretary at the budget division of the Finance Ministry, said that the ministry would go ahead with the plan to set up the fund but work has not begun yet. The ministry’s Mid-Term Budget Review had also suggested forming such a resource pool.

Former finance secretary Rameshwor Khanal, who had earlier initiated the process of setting up such a fund in 2009, said that Finance Ministry officials held a discussion with him on the matter recently.

Five years ago, a proposal to establish the fund had been sent to the Cabinet, but it was thrown out as one of the ministers rejected the idea.

A source familiar with the event said that the then energy minister Prakash Sharan Mahat had vehemently opposed the idea of setting up such a fund at the Cabinet’s economic committee claiming that the responsibility of implementing energy projects was being snatched by the Finance Ministry from the Energy Ministry.

“The concept paper had talked about funding certain big infrastructure projects that Mahat didn’t like,” said the source.  

Former finance secretary Khanal said that the proposal had been initiated against a backdrop of large piles of budget money lying unspent while some infrastructure projects were being hamstrung due to inadequate cash.

“Many bridge projects are languishing for lack of adequate money, and the assurance of resources from such a fund would help to complete such projects on time,” he added. According to him, Singapore utilized such funds successfully in its development efforts, and the idea is being replicated in Nepal.

Currently, neither has the government been able to spend properly on infrastructure projects nor have urgent projects been able to receive an adequate budget. “The formation of such a body would ensure a continued flow of resources to projects that have been able to spend their budget allocations,” said Khanal.

According to an earlier version of the concept paper, projects would get additional money from the fund based on bills presented by them.

Khanal believes that the government must take the initiative to build strategically important infrastructure, such as the Kathmandu-Tarai Fast Track which the private sector has been unwilling to touch, by using money from such a fund.   

After failing to attract prospective investors, the government is now considering developing the Fast Track with its own resources or foreign aid.

Source: The Kathmandu Post