Uncertainty surrounds budget implementation

Political uncertainty following the withdrawal of support to the government by coalition partner CPN (Maoist-Centre) has raised question over the implementation of the budget for next fiscal year 2016-17. Spending remained very poor this fiscal year due to four-month Indian embargo, the impact of last year’s earthquakes and usual trend of slow and late spending. As of July 11, only 42 percent of the capital budget has been spent, according to the Financial Comptroller General Office (FCGO). However, the environment for better budget implementation was favourable this time, with timely endorsement by the Parliament, better monsoon, low fuel price and preparation of all frameworks to accelerate reconstruction works. The government on May 28 presented a big-sized budget with an ambitious target of 6.5 percent economic growth for the next fiscal year. It was preparing to present an action plan on budget implementation at the Parliament soon. Economists said the political uncertainty could result in the failure to best utilise the favourable situation for budget implementation. Although the endorsement of the Appropriation Bill has paved the way for the government to spend the budget, subsidiary bills such as Financial Bill and Bill on raising Public Debt have not been passed. According to Parliamentary Secretariat Spokesperson Bharat Raj Gautam, these bills are planned to be passed in Wednesday’s house meeting. But given the Maoist Centre withdrawing its support to the government, there is a doubt whether the party would help these bills pass. Hit Raj Pandey, chief whip of the Maoist Centre, said they have no differences with the CPN (UML) over the budget and his party would take a decision on Wednesday. Gautam said the budget cannot be considered as fully endorsed without the passage of the remaining bills. However, Law Ministry Secretary Tek Prasad Dhungana said even if the Financial Bill and the Bill on raising Public Debt are not endorsed by the Parliament immediately, the government will not face problems in spending because the Appropriation Bill has already been passed. He said the government can change tax rates under the Collective Tax Recovery Act 2012 too even if Financial Bill is not endorsed. It is also not necessary for the government to raise public debt in the next few months. Former Finance Secretary  Rameshore Khanal said despite the political uncertainty, implementation of the budget would not be affected as much as it would have been had the government changed before the budget presentation. “Political parties seem to have matured this time as the government was not changed before the budget presentation,” he said. “The constitutional provision of requiring presenting the budget on Jyestha 15 also made the difference.” He said if project chiefs and secretaries are not changed right after the government change, there won’t be much difference in the environment for budget implementation. Similar is the view of Shankar Sharma, former vice-chairman of National Planning Commission (NPC). “Implementation of development projects can be affected if secretaries and project chiefs are changed,” he said. “Such an act will also worsen the usually poor coordination among government agencies,” he said. Donor agencies have also been raising the issue of frequent transfers of key project officials, which have resulted in poor spending. Source: ekantipur