As this fiscal year has just three months before it ends, the old trend of the federal government spending a large chunk of the development budget in these last months, especially in the last week, is expected to resurface. But the case with local governments is no different either. Eight months into the current fiscal year and the metropolitan cities are still struggling to pave a new path.
After federalism was introduced, it was hoped that the trend would not repeat in the local government at least. The metropolitan cities, which have the responsibility of spending the most on development budget, are struggling the same.
Metropolitan cities are powerful in terms of budget size and spending authority, but they are seen as weak when it comes to budget allocation efficiency and implementation capacity. With some three months remaining of the fiscal year, the development budget stats of the metropolitan cities look pathetic with only an average of 17.21 per cent of expenses.
The total development budget of six metropolitan cities is Rs 27.92 billion, but they have only spent Rs 1.42 billion, collectively.
Kathmandu’s problem
Not only among six metropolitan cities but among all the 753 local governments in the country, Kathmandu has the highest budget out of all the metropolitan cities. However, due to a lack of management skills, Kathmandu has not been able to effectively utilise its budget. Only 19 per cent or Rs 4.46 billion out of the allocated budget of Rs 22.53 billion has been spent by mid-March or the first eight months of the fiscal year.
The city only spent Rs 1.63 billion (12.53 per cent) of its infrastructure budget and Rs 501 million (11.76 per cent) on transportation development. Meanwhile, for economic and social development, it spent Rs 229.2 million (6.45 per cent) and Rs 938.2 million (25 per cent) respectively. Similarly, Rs 192.1 million (9.55 per cent) was spent on governance and inter-relations while Rs 1.684 billion (47.39 per cent) was spent on administrative expenses.
The financial progress of the city in office management and administrative expenses is 47.53 per cent. It collected Rs 4.56 billion (43.82 per cent) of the target revenue in the first eight months of the current fiscal year, which is Rs 10.41 billion.
Bharatpur and Birgunj are stuck
Like Kathmandu, the Bharatpur metropolitan city has not been able to increase development spending. It had allocated a budget of Rs 5.74 billion for the current fiscal year, of which it only spent 26 per cent (Rs 1.53 billion).
As per the capital investment, it only spent Rs 579.8 million (17.50 per cent) whereas its total spending came to be Rs 954.4 million, which is 37 per cent of the current budget of Rs 2.53 billion.
The metropolitan city achieved 46 per cent of its internal revenue target, collecting Rs 699 million out of its target of Rs 1.5 billion.
Birgunj metropolitan city has just spent 21 per cent of the capital investment so far while its spending has been Rs 1.48 billion (36.5 per cent) of the total budget of Rs 3.33 billion.
Birgunj has collected a revenue of Rs 284.75 million in this period. According to the revenue division of the city, this is Rs 110.2 million less than the spending in the first eight months of the last fiscal year (Rs 394.98 million).
Pokhara and Biratnagar at two ends
Not far from others, Pokhara metropolitan city has also only spent Rs 2.22 billion (23 per cent) of its total budget i.e. Rs 8.84 billion. Only Rs 554.5 million (11 per cent) of the total capital expenditure (Rs 5.15 billion) has been spent while Rs 1.44 billion (40 per cent) of the total current expenditure (Rs 3.66 billion) has been spent.
The city government’s chief administrative officer Birendra Bharti says that the expenditure has been reduced because of the overambitious budget, bringing down the expense in percentage.
The metropolis has only achieved approximately 49 per cent of its revenue collection target (Rs 8.84 billion) this fiscal year including Rs 654.2 million from internal sources, says the metropolis’ finance section chief Jayram Poudel.
Meanwhile, Biratnagar metropolitan city spent Rs 1.34 billion (35.57 per cent) out of Rs 3.62 billion budget. Under the development budget, which was Rs 1.89 billion, it spent only Rs 522.2 million (27 per cent).
On the other hand, the metropolis has earned Rs 1.91 billion (50.79 per cent) of the targeted revenue so far. Chief administrative officer Bishnu Prasad Koirala claims that this fiscal year, it has been in the best position among the metropolitan cities across the country in terms of budget expenditure.
Lalitpur’s legal hassle
Out of Lalitpur metropolitan city’s total budget of Rs 7.68 billion, it has spent only Rs 1.84 billion (26 per cent) so far. It had set a capital expenditure target of around Rs 5.12 billion but has spent only Rs 798.4 million (15 per cent).
Public infrastructure was allocated the highest amount of the budget of Rs 4.86 billion, but the metropolis has spent only Rs 7.896 million. Chief administrative officer Ganesh Aryal says that due to some provisions in the Public Procurement Act, the expenditure could not accelerate. He adds many projects are pending because the contractors have not completed the work on time.
Meanwhile, it has raised Rs 1.1 billion (46 per cent) of its internal revenue target of Rs 2.4 billion.
Aryal says that the failure of the delegation of rights to the ward level, despite the intention, affected the expenditure from the beginning of the year. “There seems to be some confusion about the new system even among the ward chairs and members, and we saw the problem. We hope to resolve it soon.”
Common problem
Kathmandu city’s chief administrative officer Basanta Adhikari admits this problem was seen during budget formulation as well as implementation. “There will always be such a situation where budget is allocated without paying attention to how it will be implemented,” he says, looking at the trend of the metropolitan cities.
The chief administrative officer states that while preparing the budget for the upcoming fiscal year 2023/24, the officials will design it to achieve the set target and in that, the funds from the mid-year review will also help, he adds.
Bharatpur’s chief administrative officer Narendra Kumar Rana also says that not being able to spend the development budget is a shared problem of all metropolitan cities. He says there is also a problem in the implementation capacity and intention to implement the budget appropriately.
“When contractors and user committees do not work on time, it creates obstacles in budget implementation. Another obstacle is the intention of the person who manages the budget and implements it.”
Rana hints that the metropolis has also not geared up to increase the spending rate after April either. Pokhara’s Bharati says the metropolitan cities are now prone to the same trend as the national government.
Rana’s Birgunj counterpart Laxmi Prasad Poudel adds that in the first four months, there is no spending because of the monsoon season and two of the biggest festivals, Dashain and Tihar, so the process of expenditure starts only from the second quarter.
“In the third quarter, there are a lot of expenses. But when the circulars for expenses are released this time, there is pressure for everything to be payable by the end of that fiscal year. But the metropolitan cities have a structural problem, the expenditure system is flawed. If we start spending from the beginning of the fiscal year, it can be solved to great extent,” he says.
Dr Balananda Poudel, the chief of the National Natural Resources and Fiscal Commission, also says that if metropolitan cities do not work in a planned manner, development budgets will not be spent. The lack of term-based and long-term plans is affecting spending too.
This story was translated from the original Nepali version and edited for clarity and length.
