At a ministerial review meeting last month, Prime Minister K P Oli warned bureaucrats he would not take “If’s and but’s” anymore in expediting infrastructure projects. This was his latest strict instruction to ministries to deliver results.
Various Parliament committees have also issued similar instructions. Cabinet ministers and secretaries have repeatedly instructed government officials to be result-oriented. Yet, a report this week by the Office of the Auditor General shows that four months into the fiscal year, only 11% of the budgeted capital expenditure has been spent. More frightening: the government spent three times that amount on salaries, administrative costs an overheads.
“It is clear that issuing instructions alone will not work,” says economist Keshav Acharya, “instead of more instructions we need to pinpoint obstacles to implementation of projects and remove them.”
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However, the government already has monitoring and evaluation mechanisms in place: at the Prime Minister’s Office, the National Planning Commission, and the finance and other ministries have their own project assessment committees. Most experts blame the lack of accountability in the political leadership and a lethargic bureaucracy.
There was hope that with a strong government commanding a two-thirds majority in Parliament, and devolution of power to local governments, things would change. But not only has the development budget remained unspent, but there has been shocking over-spending in current expenditure (administrative cost, salaries, vehicle purchases, or allowances on foreign trips). In the first quarter, the national government spent three times more on current expenditure than on capital disbursement.
The government is spending on cars, but not on maintaining roads. Whatever little is disbursed is mis-spent on unnecessary projects like this road that cuts through an ecologically sensitive wetland in Pokhara Valley (above).
Most provincial governments have managed to spend even less – only about 1% of their capital expenditure in the first quarter.
The inability to spend the development budget has been a chronic malaise in Nepal, but this year, it is worse because of Kathmandu’s reluctance to devolve financial decision-making to local governments. This has triggered a credit crunch in the banking sector creation and encouraged migration. At this rate the government will not meet its 8% growth target this year.
Says economist Dilliraj Khanal: “The entire system of development administration has become so ineffective that unless it is overhauled, we will not see growth and progress.”
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