MoF mulls new framework

KATHMANDU:

Ministry of Finance (MoF) is mulling over devising a number of legal frameworks to ensure timely and proper utilisation of the annual budget, and make concerned authorities accountable for delay in implementation of various development projects.

Some of these legal frameworks include laws on budget management and fiscal accountability, project implementation, and a guideline on public expenditure management.

“The finance minister has principally agreed to introduce these legal frameworks. We have already started discussions on the content of these laws and guideline,” head of the Budget and Programme Division at MoF Baikuntha Aryal said.

The latest measure is being taken following discovery of structural defects in the budgetary system, which is gradually institutionalising the faulty practice of allocating budget for various projects in a haphazard manner. This, in turn, has resulted in low utilisation of the capital budget, which is affecting various development works — ranging from construction of hydro and irrigation, to road and airport projects.

“Once we introduce a law on project implementation, concerned authorities will be held liable if they fail to implement the projects and use the allotted budget on time. It will also ensure that projects are being developed by maintaining a certain standard so that they do not turn out to be liabilities for the government,” Aryal said, adding, “This law will be complemented by another law on budget management and fiscal accountability which will ensure timely introduction of annual budget, distribution of adequate funds to promising projects, and transparency in fiscal management.”

Furthermore, a guideline on public expenditure management will also be introduced, which, among others, will link capital expenditure to outcomes so that it can be assured that investments made by the state are creating a positive impact on people’s livelihoods.

“All these efforts are being made not only to ramp up capital spending but to ensure sustainability

of projects, efficient use of budget, and creation of a positive impact on the society,” Aryal said.

One of the major concerns for the governments that have lately come to power has been the delay in utilisation of the capital budget in the initial months of the fiscal year, which generally gives rise to indiscriminate spending in the latter part of the fiscal. This raises a question over quality of spending and projects under construction.

The latest government has also become a victim of this trend, despite the introduction of the budget on time in mid-July. The government allocated Rs 85.09 billion for capital expenditure this fiscal. Of this, only Rs 11.46 billion, or 13.47 per cent, was spent in the first half.

However, government has estimated utilisation of Rs 71.74 billion, or 84.31 per cent of the money allotted for capital expenditure, by the end of this fiscal. This means Rs 58.27 billion, or 68.48 per cent of total capital budget, will be used in the second half of the year, with most of the expenditure taking place in the final quarter of the year, if past experience is anything to go by.

“This calls for the introduction of an early budget and early completion of other procedures like getting project approvals from concerned bodies,” Aryal said.

Source: THT