Development spending sluggish

Development spending sluggish
eKantipur.com, 31-May-2007
BY KRISHNA REGMI

Even though peace has been restored in the country, development process is still going ahead at a snail's pace with a large chunk of the development budget remaining unspent.

The data of the Financial Comptroller General Office shows that during the first eight months of the current fiscal year, the country used up just 26 percent of the total allocated capital expenditure, which mostly entails development spending. Of the cash allocation of Rs 33.36 billion, only Rs 8.75 billion was spent.

During the same period last year, the government had spent nearly 39 percent of the total cash earmarked for development budget.

The government's inability to spend affects projects ranging from key social sectors to major infrastructure.

On the social services like health, education, and drinking water, and local development, the expenditure was nowhere close to allocation. Of the allocated Rs 18.76 billion, only Rs 3.76 billion, a meager 20 percent, was utilized during the period.

The agriculture sector, the lifeline of two-third of Nepalis, is in a sorry state. A little over 87 million rupees was expended on agriculture sector. The government earmarked Rs 867.5 million for agriculture under the capital expenditure.

The scenario is much the same on transportation, including road network, a prerequisite for anchoring future development process, where only 20 percent of the appropriated budget was spent. Of the total earmarked budget of Rs 6.88 billion, only Rs 1.46 billion was utilized.

The expenditure on major development projects has also progressed at a very slow pace. Mid-Marsyangdi hydro project saw spending of Rs 190 million, far too below of what the government allocated -- Rs 3.05 billion. The spending on the much-needed Melamchi drinking project, which is now close to deathbed, is at low ebb. The project used up 400 million rupees, while the allocation is Rs 1.62 billion.

Economists blame unrealistic and ambitious allocations, multilayer and complicated decision-making channels, and donors' strings attached to big projects for the low spending levels.

Due to poor implementation of projects, US$ 8 billion meant for Nepal has been lying idle at the Asian Development Bank and US$ 400 million at the World Bank. Still disturbing is the fact that the government has a staggering 15 million rupees as treasury surplus in its coffers by this mid-May while a large number of people are deprived of basic services like health facilities and education.

Summing up the poor scenario on the development process, Dr Bimal Koirala, former chief secretary, said the process is feeling the punch of structural inflexibility in the spending system, poor absorptive capacity and absence of local bodies.

He said governance was weak, and civil servants morale down. “Conventional delivery system of public services no longer works. A system that has accountability of the people, and establishes their claims should be put in place to push the development process,” he said.

“After all, the government has put the economic agenda on a backburner, even though there is a greater need to give peace dividend to the people.”

He said the political parties seem to be unaware that peace, democracy and development are complementary to each other.

Krishna Hari Baskota, joint secretary at the MoF said two-month strike of contractors in the beginning of the fiscal year, terai protest and frequent shortages of petroleum products, primarily diesel have hampered development works.