Less than 11% of development budget spent in first half of FY

KATHMANDU: As six months of the current fiscal year near completion, less than 11% of the development budget has been spent, raising concerns about the pace of public investment.

According to the Ministry of Finance, the government, which allocated over Rs 400 billion for capital expenditure, has spent only Rs 4.36 billion as of Jan 10 (Poush 26).

This accounts for just 10.69% of the total allocated budget. In comparison, the same period last fiscal year saw Rs 5.358 billion spent, representing 15.21% of the budget.

This indicates that current development spending is lagging behind last year’s pace.

Officials point to disruptions caused by the Gen Z movement and delays in project contracts as major factors affecting budget implementation.

Ministry of Finance spokesperson Tanka Prasad Pandey acknowledged that capital expenditure faced challenges, noting that administrative delays over roughly a month and a half hindered effective budget utilization.

He added that the ministry has been facilitating government agencies to improve spending and expects significant improvement in development budget implementation in the coming months.

Pandey also noted that when contractors fail to work for extended periods, it affects project progress. Measures regarding underperforming contracts have been taken under existing laws, which are expected to positively impact future development projects.

Construction industry representatives have also expressed concerns about the slow pace of development.

Ravi Singh, Chair of the Federation of Construction Entrepreneurs, said that in the past, projects were selected based on ad hoc decisions, creating difficulties for contractors in executing work.

He emphasized that unnecessary or unproductive projects should be terminated according to the Public Procurement Act, with mutual agreement between offices and construction companies.

Singh further explained that delays in project implementation could result from shortcomings on both the administrative and contractor sides.

He stressed that government offices should fulfill all payment obligations before terminating contracts, while contractors’ performance guarantees should be forfeited if delays are due to their negligence.

The slow pace of development expenditure appears to be a cycle of blame between the government and construction entrepreneurs, with little evidence of collaborative effort to address the underlying problems in the sector.