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In yet another example of poor spending capacity of government bodies, various ministries and public offices have surrendered over Rs 5bn allocated for the current fiscal year 2024-25, which ends in mid-July. According to an official at the Ministry of Foreign Affairs, the majority of the returned funds are from the capital expenditure heading. Of the total amount surrendered, Rs 53.4m came from the recurrent budget, while Rs 5.03bn came from the capital expenditure budget.

As per the Financial Procedures and Fiscal Accountability Act, 2019, and the Financial Procedures and Fiscal Accountability Regulations, 2020, budget that remains unspent by mid-March and cannot be utilized within the fiscal year must be returned to the Ministry of Finance by the end of March.

The Ministry of Energy, Water Resources and Irrigation, and the Millennium Challenge Corporation (MCC), which is also known as the Millennium Challenge Account (MCA) Nepal—the implementing body of the Millennium Challenge Corporation (MCC) projects—each returned more than Rs 2bn.

Among recurrent budget returns, the Election Commission surrendered the highest amount at
Rs 24.2m, followed by the Ministry of Land Management, Cooperatives and Poverty Alleviation (Rs 15.8m), the Ministry of Communication and Information Technology (Rs 9.5m) and the Ministry of Culture, Tourism and Civil Aviation (Rs 3.9m).

In terms of capital expenditure, the Ministry of Energy, Water Resources and Irrigation returned the largest share at Rs 2.35bn, followed by MCA Nepal (Rs 2bn), the Ministry of Industry, Commerce and Supplies (Rs 367.8m), the Ministry of Foreign Affairs (Rs 300m), and the Office of the Auditor General (Rs 16.1m).

With less than three months of the fiscal year remaining, the government has been able to spend only 56.56 percent of the allocated budget till April 28. The progress in capital expenditure remains at a dismal 30.93 percent. Capital expenditure has consistently slowed since the Covid-19 pandemic. In 2021-22, only 57.23 percent of the development budget was spent. Capital spending improved to 61.44 percent in 2022-23 and 63.47 percent in 2023-24. Over the past four years, the average capital expenditure has hovered around 60 percent. 

Current spending trends suggest that 2024-25 will follow a similar trajectory. Before the pandemic, Nepal achieved higher capital spending rates, averaging around 70 percent. Capital expenditure stood at 76.93 percent in 2018/19 and 80.77 percent in 2017-18.

The Nepal Stock Exchange (NEPSE) plunged by 15. 08 points to close at 2,631.98 points on Tuesday.

Similarly, the sensitive index dropped by 1. 93 points to close at 443. 54 points.

A total of 18,491,941-unit shares of 311 companies were traded for Rs 7. 57 billion.

Meanwhile, Crest Micro Life Insurance Limited (CREST) was the top gainer today with its price surging by 10. 00 percent. Likewise, Madhya Bhotekoshi Jalavidyut Company Limited (MBJC) was the top loser with its price fell by 9. 88 percent.

At the end of the day, the total market capitalization stood at Rs 4. 37 trillion.

The provincial government of Karnali has developed a master plan to build the necessary road infrastructure across all its 10 districts in order to improve transport services at the rural level.

Senior Divisional Engineer Ramesh Subedi, spokesperson for the Ministry of Physical Infrastructure and Urban Development of Karnali Province, said, “For the first time, a provincial road network master plan has been prepared in Karnali, in collaboration with the Ministry of Physical Infrastructure and Urban Development and the Department of Local Infrastructure Development.”

The roads under Karnali Province have been mapped using GIS technology and listed district-wise. As per the Work Division Regulations 2017 of the Karnali Province Government, the Ministry of Physical Infrastructure and Urban Development is primarily responsible for formulating and implementing policies, laws, standards, and plans related to transport, highways, safe settlements, and land integration at the provincial level. Ministry Secretary Ishwor Chandra Marhatta said, “This includes the formulation, implementation, monitoring, and evaluation of infrastructure plans and master plans within the province.”

Marhatta further stated, “In the absence of a road master plan, the process of selecting and prioritizing projects was neither scientific nor transparent. Now, with the preparation of the road network master plan and the introduction of a system to prioritize roads and plan accordingly, we expect planning to become more transparent and objective, ensuring optimal and effective use of limited resources.”

He added that through the policy and program of the Karnali Provincial Government for the fiscal year 2024/25, it was announced that a provincial road master plan would be prepared. The plan prioritizes identified provincial highways and other routes to ensure that road infrastructure—the backbone of development—is balanced, systematic, effective, sustainable, reliable, and safe, with a focus on environmentally friendly and disabled-friendly projects implemented gradually.

The budget statement of the Karnali Provincial Government for the fiscal year 2024/25 also emphasized the preparation of the provincial road master plan and the formulation and implementation of plans and programs based on prioritized roads.

The first five-year plan of the Karnali Provincial Government (2019–2024) included a strategy to prepare a road master plan aimed at developing a quality road network based on the transport sector’s priorities. Similarly, in the second five-year plan (2024–2029), the provincial government expects to approve the road master plan and implement related criteria, priorities, and action plans as part of major interventions for physical infrastructure development.

Minister for Physical Infrastructure and Urban Development Sher Bahadur Budha said that important government documents have consistently emphasized the need for a road network master plan. He noted that the Karnali Provincial Government has announced its intention to approve the master plan within this fiscal year through its policy and budget statement. Development partners supporting roads and bridges in Karnali have also prepared and approved the master plan and recommended that future projects align with it.

Due to a lack of suitable technical manpower within the ministry, the draft master plan was initially prepared in 2020 with assistance from the Local Infrastructure Development Department, Kathmandu, through the Rural Access Program. The draft was finalized after consultations with relevant stakeholders, offices, and public representatives, with support from the Local Roads and Bridges Support Program.

Karnali remains significantly behind in terms of road infrastructure development. Manav Bam, General Secretary of the Federation of Construction Entrepreneurs of Karnali Province, said, “By preparing and implementing the road network master plan, the government has energized the road infrastructure development sector here. Moving forward, the new budget will prioritize infrastructure development in accordance with the master plan.”

While the budget implementation for the current fiscal year remains worrisome, the Sudurpaschim provincial government has begun preparations for next year’s budget. It has started collecting suggestions from various stakeholders to determine priorities for the upcoming fiscal year.

So far, even the development ministries have spent less than 35 percent of their allocated budgets. Some ministries have utilized only two percent of their capital budgets, while the Ministry of Physical Infrastructure—which accounts for the largest share of capital expenditure—has spent only 24 percent.

Chief Minister Kamal Bahadur Shah said that future plans would be selected based on needs and programs.

The Provincial Policy and Planning Commission organized an interaction program to collect feedback on the priorities for next year’s policies, programs, and budget. Separate discussions have been held with economic and development experts, private sector representatives, industrialists, and businesspeople. The provincial government has prioritized the modernization and commercialization of agriculture.

At the interaction program, the government announced it would focus on nine key sectors: modernization and commercialization of agriculture; tourism development; quality physical infrastructure development (including energy, transportation, communication, housing, drinking water, and irrigation); social development (including education, health, social security, conservation, and employment); industrialization; poverty alleviation; forest and environment-friendly green development including herbal production; institutional strengthening and good governance; and the development of a digital province. The government has adopted the slogan “Self-reliance-oriented, prosperous Far West.”

Experts participating in the discussions suggested that the government prioritize health, education, employment, and religious and cultural tourism sectors in its policies and programs. They also emphasized the need to utilize water resources for income generation, view community forests as an economic asset alongside conservation, and focus on quality, employment-oriented, and technical education for educational reform.

Additional suggestions included promoting research and development, introducing programs targeting young entrepreneurs, providing concessional loans ranging from Rs 1.1m to Rs 2m for youth businesses, and enhancing tourism promotion, especially linking adventure tourism (such as hiking and trekking) with agriculture.

Participants also recommended better tax management, encouragement of small and cottage industries, subsidies for production, price stabilization of agricultural products, the establishment of industrial corridors, and simplifying the firm registration process through a one-stop system.

Speaking at the program, Chief Minister Shah said the suggestions would be incorporated into the upcoming policies and programs. “Investments will be made in concrete and tangible areas according to the province’s capabilities, directly benefiting the people,” he said. He also urged participants to submit their suggestions in writing within ten days.

Discussions also covered the status and implementation of long-term programs, the initiation of the project bank, standardization of project designs and Detailed Project Reports (DPRs), reducing recurrent expenditure, increasing capital expenditure, boosting internal revenue, promoting good governance, encouraging citizen participation, and enhancing the effectiveness of consumer committees. Attention was also given to the need for effective, citizen-focused policies and programs for the coming fiscal year.