KATHMANDU, May 5: Ministry of Finance (MoF) has indicated that it might soon relax its capital spending norms, which restrict the government agencies from expending more than 40 percent of the total capital budget in the last quarter, after the provision started affecting national priority projects.
Till last week the ministry had stated it stood firm on the norms and would not relax it under ´any condition´. But officials said they are of different opinion now, particularly after national priority projects started facing troubles due to the cap.
“There is a severe pressure from the agencies handling large development projects such as Ministry of Physical Planning and Works (MoPPW) and their concerns are genuine too,” said a MoF source.
The Ministry has ´almost´ made up its mind to be flexible after the norms blocked Railway Department, which was provided with additional budget of Rs 300 million, and Kathmandu-Tarai fast track project, which also got additional fund, from completing the land acquisition.
The government had imposed the cap, under which Ministries are not allowed to spend more than 40 of their total capital collations in the last quarter and more than 20 percent of their total capital allocation in the last month of the fiscal year, mainly to encourage round the year operations of development projects and check haphazard and ineffective use of resources at the last hour of the fiscal year.
“Its objective is noble. But question facing us now is if it is appropriate for us to be rigid and ignore the necessity of the country and people´s development aspirations?” said the source.
Referring to the low capital spending, which remained just over one-third of the total annual allocations in the first nine months of 2011/12, senior MoF officials argued remaining firm on the norms might, in fact, prove like doing injustice to the people who are seeking peace dividend.
Although some of the officials are still against the relaxation, saying that it will only open the floodgate of misuse of resources, they are, however, in minority.
Sources said the Ministry will take the decision on relaxation next week once the finance secretary, who is presently in Manila to participate in annual meeting of Asian Development Bank (ADB) return.
The government had first adopted the capital spending norms in 2010/11, but failed to adhere to it last year as well. It had cited delayed budget and low capital spending as the reason for dumping the norms.