The state coffer is depleting with spending surpassing income by almost Rs 100 billion in the first six months of the current fiscal year.
The government spent Rs 373.06 billion and generated revenues amounting to Rs 273.94 billion by January 3, according to the Financial Comptroller General Office that keeps the details of government spending and income. The government similarly has raised internal debts of Rs 109 billion. The treasury, in this way, has just Rs 9 billion remaining.
The government spent mainly to hold elections, operate some development projects, provide grants to the local bodies, and pay interest on government debts. Finance Ministry officials say around Rs 1 billion has been spent through Cabinet decisions in the past six months.
The treasury is strained also due to additional expenses for elections and grant for local bodies in comparison to other years. The government had estimated the election expenses and local grant, and allocated money accordingly. The main reason for the pressure on state coffers is that expenses were incurred simultaneously while revenue is being collected gradually as in the previous years.
The lack of funds in the treasury may have direct impact in the construction of physical infrastructures for the provincial governments.
The government has taken a decision to send Rs 1 billion each to every province. But release of the amount does not seem possible until arrangements of resources are made due to lack of money for the government to spend.
The government has not been able to make payments for construction of strategic roads and highways under the Ministry of Physical Infrastructure and Transport. The government has not been able to make payment to construction entrepreneurs who have finished works and submitted the bills.
Finance Secretary Shankar Prasad Adhikari said payment for expenses for which there are budgetary provisions has not been stopped until now. "But we cannot pay for the expenses not mentioned in the budget," he added.
It will be a bit easier for the government soon as private and quasi-governmental sectors will pay income tax for six months by mid-January. The Ministry aims to collect Rs 30 billion through income tax in the month of Poush ending in mid-January. "We will think about raising debts if there is shortage of money even after Poush," Secretary Adhikari said.
Constructor entrepreneurs, meanwhile, have complained that they are facing difficulty with the government not releasing money. General Secretary of the Federation of Contractors' Associations of Nepal Ram Sharan Deuja said they are under risk of being blacklisted by banks for failing to pay interest on loans due to delay in payment by the government.
Secretary Adhikari, however, claimed that it is not so in case of every contract. "The problem of construction entrepreneurs is only related to small roads under the local level," he argued. "We are coordinating on that. There is not much problem in others."
The government also does not have money to make payment for development projects before mid-January.
The biggest problem due to lack of finances is set to be seen in integration of staffers. Secretary Adhkari said money needed for integration of staffers that has not been mentioned in the budget cannot be provided. "It will be difficult for us to release money for any expenditure not mentioned in the budget," he stated. "It is not possible to manage a lump sum of big amount given to the staffers when they opt for voluntarily retirement through regular resources in the current year."
There is legal provision requiring the government to send those staffers unwilling to be deployed at the provincial and local levels to retirement with a lump sum. The government will have to pay pension equal to seven years in a lump sum to any retiring staffer who has served for more than 20 years and is above 50 years in age, according to the Civil Servants Integration Bill already passed by the House.
The ministry does not know how much money will be needed for that as the amount will be determined by the number of staffers who will retire, according to Secretary Adhikari. Around Rs 20-45 billion may be required for the purpose, according to a study done by the ministry some time back.
The probable delay in integration looks set to affect works of local level at a time when the local bodies have been complaining about inability in spending budget due to lack of technical human resources.
