43pc capital expenditure in last month of FY: ADB

THE government spent 43 percent of the capital budget in the last month in FY 2012- 13, while capital expenditure in the last quarter stood at 64 percent, a report has shown. “This raised concern about not only the absorbing capacity of but also the procedural and procurement delays along with realistic expenditure planning of the capital budget,” states an Asian Development Bank (ADB) report. The government had allocated Rs 66.13 billion under the capital budget heading in FY 2012-13. ADB’s latest ‘Micrœconomic Update’ of Nepal states there has been civil work growth of just 3 percent, reflecting a delayed full budget and procedural hassles in approval and procurement for projects. Secretary at the Ministry of Physical Infrastructure and Transport Tulasi Prasad Sitaula said half of the payment made in the last month of the fiscal year was related to work completed in the earlier months and that it should not be considered that all work was completed in the last month. But he admitted to the trend of late spending, which he said must be changed. He said the code of conduct issued by the Election Commission has affected work as they are finding it hard to send necessary officials to work sites. According to the ADB report, even within the capital expenditure, land purchase and building construction registered a negative growth, while expenditure for vehicle purchase grew by 50.4 percent. Expenditure for plant and machineries grew by 18.8 percent. Lack of project readiness due to the failure to acquire land, establishment of project management offices and preparation for procurement plans, delay in budget release, delay in procurement process and overall weak project planning resulted in poor capital expenditure, the report says. The ADB has stressed on the need for rationalization in ballooning recurrent expenditure which is almost equal to the total tax revenue. “There is a need to reduce unproductive expenditures and scale up capital investments to support the objective of attaining higher economic growth,” states the report. According to the report, recurrent expenditures increased to 15.2 percent of the gross domestic product (GDP) in FY 2012-13, from 12.9 percent in FY 2008-09, capital expenditures decreased to 3.1 percent of the GDP in FY 2013 from 6.6 percent in FY 2009. On micro-economy, the ADB has said Nepal is expected to see better output in the current fiscal year. However, it said economic growth would not be as much as the government has predicted. The government has estimated 5.5 percent economic growth and 8 percent inflation. But the ADB said the realistic estimate of GDP growth and inflation is 4.5 percent and 10.5 percent, respectively.