Construction contractors often begin work months before but receive payments only near the fiscal year-end. Data from the past eight years shows that on average 35 percent of the capital expenditure is completed within Ashad, while the first two months of the fiscal year, Shrawan and Bhadra, see barely 1 percent expenditure. Ministries and local governments delay work due to various issues like court stay orders, lack of budget allocation, and administrative hurdles.
Capital Budget Allocation Decreasing
Over the years, the share of capital expenditure in the total budget has been decreasing. In fiscal year 2076/77, the capital budget was 26.6 percent of the total, which dropped to 18.9 percent in 2081/82. Though many committees have recommended reforms to improve budget utilization and timely spending, little significant progress has been made.
Challenges in Project Implementation
Officials point to the addition of new projects without proper funding and awarding contracts exceeding government capacity as major reasons for poor spending. Construction Business Federation President Ravi Singh says that ministers prioritize new projects in their areas but do not allocate enough funds to ongoing ones, worsening the issue. This results in delayed payments and incomplete work.
Recommendations to Improve Spending
High-level commissions suggest several measures to address the problem. These include ensuring budgets are fully secured before awarding contracts, keeping project staff unchanged throughout the project duration, monitoring monthly progress closely, and making mandatory payments within 15 days after work completion. Such steps could help prevent the usual year-end rush and promote steady economic growth.
Sector-Wise Spending
Currently, about 70 percent of the capital budget is spent on public construction projects. Transport infrastructure takes up a major share, followed by energy, irrigation, culture, tourism, urban development, and drinking water sectors. However, the capacity of ministries to effectively spend allocated budgets remains weak, contributing to underutilization of funds.
