My Repblica, May 13, 2019
Experts say withholding payments may be an indication of corrupt motives
KATHMANDU: Government spending in development projects has sharply fallen in the recent days, the government statistics shows. The average daily capital spending is only Rs 41 million in the last 11 days, according to the daily spending records at Financial Comptroller General Office (FCGO).
Government has only paid Rs 458 million for project development in the past 11 days, which was the only record available. Such slow spending is against the trend, as government payments would speed up in the months from May to June. With the last minute spending, the government would spend more than a third of the total annual money in the last few weeks of the fiscal year ending mid-July.
Capital spending till date hovers below 40 percent of the total Rs 313 billion, while only two months remain in the current fiscal year.
Situation of recurrent spending is no different. Government has paid only Rs 724 million in this period on regular expenses, including salaries. Officials of the FCGO did not provide any comment on the slow rate of spending. On the other hand, contractors of development projects have been blaming the government for withholding payments without any reason.
Former Finance Secretary Rameshwore Khanal said that the figures are not surprising as bill payments to contractors are put on hold without any reason.
“This is the time for paying bills of large amounts, mostly submitted by the contractors against works done in February and March. There may be a corrupt motive behind holding up these payments,” added Khanal.
Khanal also said that payments against works at Lumbini International Airport, different sections of Mid-Hill Highway and other road projects have not been made yet.
“Daily figures of capital spending are at the lowest level because the government has almost stopped payments of bills. This has brought development works to a standstill because the contractors are cash strapped at this moment," said Jayaram Lamichhane, president of Federation of Contractors Association of Nepal.
“We realize that there is an undeclared government policy of withholding payments to contractors in the recent weeks,” lamented Lamichhane adding that this has stymied the private sector.
The government has to immediately pay an estimated Rs 72 billion to contractors and different parties related to development projects, according to Lamichhane.
Contractors have said that lack of payment has been affecting their work, while banks and financial institutions have been facing further liquidity crunch and shortage of lendable cash.
Khanal said: “It seems the Minister for Finance is not aware of this gloomy picture of project management. Many ministers handling development projects are halting payments directly or indirectly.”
While releasing mid-term report of the budget and programs in March, Minister for Finance Yubaraj Khatiwada had said that he could not do much toward making timely payments to contractors though he had been receiving several complaints on the matter.
Dilaram Giri, deputy comptroller general at FCGO, did not give any clear answer on the slowest rate of development spending so far. When asked if there was shortage of cash in the government treasury to release payments, Giri denied answering. He just said that Nepal Rastra Bank had not returned any bills unpaid.