With only one week left to end the current fiscal year, there has been a dramatic surge in government budget spending. The government’s average daily spending has reached Rs 11.5bn in the last nine days, which during normal days, used to stand at Rs 5-6bn per day. The data of the Financial Comptroller General Office which keeps track of the government’s income and expenditure, shows both recurrent and capital expenditure has surged in recent weeks. On Saturday (July 8), despite being the weekend, the government paid out Rs 16.23bn. As the new fiscal year starts on July 16 (Shrawan 1), the annual budget of the government should be spent by mid-July (Ashad-end). However, the budget implementation and payment remain slow in the initial months, only to pick up in the last quarter.

As expected, there has been an improvement in capital spending in Ashad. In the first 23 days of Ashad, the capital expenditure has increased by Rs 36.96bn. The government’s average daily spending has reached Rs 2.74bn in the last nine days.

The government’s capital expenditure as of July 8 reached Rs 190.04bn, which is 60.55 percent of the revised capital budget for the current fiscal year 2022/23. The government had initially set a capital expenditure target of Rs 380.38 billion which was slashed to Rs 313.85 percent in the half-yearly review of the federal budget. The last-minute increment in fund utilization has raised the question of the quality of capital spending in the country. The majority of capital spending takes place in the last month of the fiscal year i.e., Asar (mid-June to mid-July). The report of the Office of the Auditor General (OAG) also shows that 40 percent of the total capital expenditure takes place in Asar. In Nepal, government spending is carried out under three headings—recurrent expenditure, capital expenditure, and expense on financial management. Recurrent expenditure is mainly associated with administrative costs, including operation grants, capital grants, and costs for ongoing projects. Capital expenditure involves expenses made in infrastructure development, construction, and other sectors that help generate real capital in the country. According to government officials, it is natural to see a surge in government payments due to the obligation to spend the current year’s budget within the fiscal year (mid-July). But economists say that the trend of expediting spending only in the last month of the fiscal year shows the government’s fiscal indiscipline. This pattern of spending increases the possibility of sub-standard quality of capital projects and an increase in recurrent spending, in operations and maintenance costs, for the coming years, they said.  “This also shows that the government is not adhering to fiscal discipline,” said economist Chandra Mani Adhikari. In order to resolve this perennial problem, Adhikari suggested that the budget spending system should be made scientific.