KATHMANDU, June 29: With just around two weeks left for the current fiscal year to end, the government has spent only about one-third of the budget allocated for development works, once again exposing Nepal’s persistent struggle to implement capital projects on time.
According to the Financial Comptroller General Office, the government had spent only 34.87 percent of the capital budget as of June 27. Out of the Rs 407.88 billion allocated for capital expenditure this fiscal year, only Rs 142.23 billion has been spent. Capital expenditure is generally considered the development budget.
The slow pace of spending reflects a long-standing weakness in Nepal’s budget implementation system. The situation is even worse compared to the same period last year, when the government had spent 44.76 percent of its capital budget by June 27.
Although governments traditionally accelerate spending in the final month of the fiscal year, officials and experts say it will be difficult to achieve the spending target within the limited time remaining.
Despite sluggish capital spending, overall government expenditure has crossed 70 percent. Of the total annual budget of Rs 1.965 trillion, the government has spent Rs 1.405 trillion as of June 27. However, most of the expenditure has gone toward recurrent expenses and debt servicing rather than development activities.
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The government has spent Rs 949.86 billion, or 80.43 percent, of the Rs 1.180 trillion allocated for recurrent expenditure. Similarly, under financial management, Rs 312.99 billion has been spent out of the allocated Rs 375.24 billion, accounting for 83.41 percent.
Meanwhile, revenue collection has also fallen short of the target. Against the government’s goal of collecting Rs 1.480 trillion in revenue, only Rs 1.112 trillion, or 75.17 percent, has been collected as of June 27.
Tax revenue collection stands at 76.21 percent of the target, while non-tax revenue collection has reached only 66.27 percent. Foreign grant receipts remain weak, with only 45.17 percent of the target achieved. Including revenue, grants and other income, the government has collected Rs 1.143 trillion, or 74.55 percent of its annual target.
Low capital expenditure has become a recurring challenge in Nepal’s budget implementation. Every year, a large portion of development spending takes place only in the final month of the fiscal year, triggering criticism over rushed work and questions over project quality.
Experts attribute the weak spending to several factors, including delays in contract awards, poor project preparation, hurdles in land acquisition and environmental approvals, complicated procurement procedures, contractor delays and frequent transfers of government employees.
Economists also blame the practice of allocating budgets to projects without adequate preparation. Even after projects begin, poor coordination among ministries, government agencies and local governments often slows implementation.
The Rastriya Swatantra Party (RSP)-led government, which is nearing three months in office, has also failed to bring visible improvement in capital spending. Despite expectations that development activities would gain momentum after the change in government, the figures show little progress.
The government has repeatedly pledged to speed up budget implementation, improve project management and increase spending. However, the latest figures suggest those commitments have yet to produce results.
With the fiscal year nearing its end and capital expenditure still below 35 percent, the figures highlight deeper problems in budget execution. Experts say the issue cannot be resolved without reforms in project planning, procurement systems, administrative capacity and the overall government mechanism responsible for implementation.
The consequences of weak capital spending extend beyond government accounts. Delays in infrastructure projects slow economic activity in sectors such as construction materials, cement, steel, transportation, hotels and employment.
Government development spending is also a major source of demand for the private sector. Failure to build infrastructure such as roads, bridges, irrigation systems, energy projects, schools and hospitals affects private investment and job creation. It also prevents money held in the banking system from moving into productive sectors.
Economists warn that weak capital expenditure could hurt economic growth, reduce government revenue collection and lower overall market demand. They argue that despite the Nepal Rastra Bank lowering interest rates and banks having sufficient liquidity, economic activity has not gained expected momentum due to weak government spending.
The annual rush to spend money in Ashadh has long been criticized in Nepal. Completing projects hastily, clearing bills and exhausting budgets in the final weeks of the fiscal year often raises concerns over the quality and sustainability of development works.
Although the government may attempt to accelerate spending during the remaining days, the current progress makes achieving the target highly unlikely. Experts say the repeated failure to improve development spending shows the need for structural reforms from project selection to implementation.
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