Contractors denied payments even though govt has Rs 100 billion in reserves

KATHMANDU: Nepal Rastra Bank (NRB) has reported that the government has a cash balance of Rs 99.27 billion.

Despite concerns in the previous fiscal year about potential delays in the salary of civil servants and payments to contractors, the central bank states that the government had nearly Rs 100 billion in cash reserves at mid-July.

This cash balance is the funds in the accounts of provinces and municipalities.

Former Finance Minister Dr Prakash Sharan Mahat had withheld fiscal equalization grants to local units, citing the failure of the municipal governments to submit financial reports. Later, the new coalition government of CPN (Maoist Center) and CPN-UML released the withheld Rs 17 billion in July-end.

Although the government holds a substantial cash balance, payments to contractors for completed works remain stalled. Rabi Singh, president of the Federation of Contractors’ Associations of Nepal, said the government owes contractors over Rs 60 billion in outstanding payments. He added that 1,800 projects worth Rs 400 billion are in limbo due to the non-renewal of contracts.

Deputy Prime Minister and Finance Minister Bishnu Prasad Poudel has assured that the government will not halt payments to contractors. This assurance came after contractors threatened to protest if their outstanding payments were not cleared.

Former Finance Minister Mahat claimed that previous governments had recklessly awarded contracts without ensuring funding, making it difficult to determine the government’s liabilities. He said he had stopped this irregularity and initiated a process to pay contractors based on work evaluation.