Koshi struggles to spend capital budget

ITAHARI: The Koshi Province Assembly endorsed the Economic Ordinance Replacement Bill on Sunday. Chief Minister Kedar Karki presented the Budget Replacement Bill in the provincial assembly, proposing a budget of Rs 36.74 billion for the fiscal year 2023/24. Of the total allocation, Rs 12.68 billion has been earmarked for recurrent expenses, Rs 20.38 billion for capital expenses, and Rs 3.66 billion for financial transfers to local governments.

To finance its expenses, the provincial government aims to raise a total of Rs 32.84 billion: Rs 4.57 billion from inland revenue, Rs 11.64 billion from revenue sharing, Rs 8.78 billion from equalization grants, Rs 5.84 billion under conditional grants, Rs 730 million under complementary grants, and Rs 760 million under special grants from the federal government. It plans to use a cash reserve of Rs 4.25 billion to fill the resource shortfall and also intends to raise Rs 150.4 million through foreign grants.

The province had struggled to finalize its fiscal budget due to frequent changes in the government. Consequently, there has been a lackluster spending of the capital budget in the province. According to the Ministry of Economic Affairs and Planning, the provincial government has spent only 7.54% of the capital budget and 11.63% of the recurrent budget in the first four months of the fiscal year 2023/24.

“Analyzing the spending pattern before and after the country embraced federalism, we can observe that the working style of government agencies hasn’t changed significantly. Low spending capacity remains our chronic issue,” noted economist Umesh Khadka. He mentioned that delays in tendering and a protracted tendering process have been impeding capital spending.

“Even after projects are awarded, they encounter various obstacles, such as environmental concerns and delays in site clearance,” he said. “Projects are often selected without in-depth study. All this serves the vested interests of some individuals who spend in the final months of the fiscal year.”

Khadka also pointed out that many projects haven’t even entered the tendering process, supporting the claim that everyone is waiting for the last month of the fiscal year to initiate spending.

Spending satisfactory in Biratnagar

The progress in spending, however, is satisfactory in Biratnagar, the only metropolitan city in the province. In the first four months of 2023/24, Biratnagar Metropolitan City achieved 24.51% progress in recurrent expenditure and 25.22% progress in capital expenditure.

The metropolitan city has proposed to spend Rs 2.85 billion in the current fiscal year. Regarding capital spending, most of the expenditures have been made for multi-year projects and projects of provincial pride initiated in the past fiscal years.

Mayor Nagesh Koirala expressed that spending would expedite after new projects go into implementation.