The government is falling short on capital spending yet again, highlighting long-standing inefficiencies in implementing its development budget.  With one month in the current fiscal year 2024/25 remaining, the government has been able to utilize only 41.01 percent of its capital budget of Rs 352.35bn. According to the Financial Comptroller General Office (FCGO), the government has been able to spend only Rs 144.49bn of its capital budget till June 15.

The new fiscal year begins on July 17. This means the government has about a month to spend nearly 59 percent of its capital budget. The low capital spending continues a worrying trend of funds allocated for infrastructure and development works remaining underutilized. In the previous fiscal year 2023/24, the government utilized 63.47 percent of its capital budget, amounting to Rs 191.73bn out of Rs 302bn. In 2022/23, 61.44 percent of the capital budget of Rs 380.38bn, or Rs 233.69bn, was spent. Likewise, the 2021/22 saw a low capital budget utilization at 57.23 percent. These figures pale in comparison to pre-covid years when capital spending remained at 76.93 percent in 2018/19 and 80.77 percent in 2017/18.

The consistently poor capital expenditure performance can be attributed to several deep-rooted issues. Many development projects are included in the budget without final designs, feasibility studies or necessary environmental approvals. These result in delayed implementation. Moreover, the slow procurement process due to bureaucratic hurdles also affect project timelines. It often takes months just to award contracts. Contractor inefficiencies, largely due to the tendency of holding multiple projects at a time, and a lack of monitoring further compound the issue. 

Another worrying trend in Nepal’s development landscape is the last-minute spending rush toward the end of the fiscal year. State agencies, which under pressure to meet spending targets, disburse large sums in the final weeks. Experts say last minute spending compromises the quality of work and fails to deliver desired outcomes. 

Revenue mobilization at 71.84 percent

The government has achieved 71.84 percent progress in revenue mobilization over the first 11 months of the current fiscal year.  According to the FCGO, the government has mobilized Rs 1,019.67bn in revenue in the review period which is 71.84 percent of Rs 1,419.30 that the government is targeting to raise in the current fiscal year. Of the total revenue, Rs 921.40bn is from tax revenue and the remaining from non-tax revenue