Cash-rich, Development-poor

In a story published in Nepali Times in May 2003, we reported that 30% of the development budget was unspent with just six weeks to go before the end of the fiscal year. Twenty years later, we have managed to spend only 33% of our capital expenditure 10 months into the current fiscal year. Things are not just the same, but getting worse.

Of the Rs380.38 billion allocated for the development budget, the government has managed to spend just Rs125.68 billion. Underspending is a chronic problem and to make up for it, much like every year, there is going to be a spur of hasty construction in the last months of the fiscal year. Poor planning starts right here.

Excerpt of the report published 20 years ago this week in issue #145 16-22 May 2003:

With only six weeks to go till the end of the fiscal year, 30 percent of the development budget is unspent. Donors, who foot three-quarters of this money, are getting worried about the government's inability to spend money when the need is so great.

The irony is that the country's macro-economic situation has never looked better. Buoyed by remittances from Nepalis abroad, our foreign currency coffers are enough to pay for 11 months of imports. Liquidity grew by six percent compared to last year. The government's cash savings have gone up from Rs740 million overdraft last year to a surplus of Rs1 billion. Remittances have more than made up for the fall in tourism receipts and export.

Development expenditure is down, but regular expenditure (salaries, civil service, overheads) is up by Rs3 billion from last year. Defence spending is up by Rs1 billion to to more than Rs7 billion this year. As happens at the end of every fiscal year, the development section of the Finance Ministry is a busy place these days. Up to Rs700 million is being released every week as various agencies try to beat the deadline to prevent their allocation from lapsing. 

From archive material of Nepali Times of the past 20 years, site search: www.nepalitimes.com