The government agencies have not been serious in settling the unsettled accounts as the total arrears have seen no decrease in recent years, according to a report.

The total arrears with different government agencies stood at Rs 73.20 billion by the fiscal year 2012-13 also due to lack of good governance and negligence in public spending, according to Office of the Auditor General that submitted the 51st report to the President Dr Ram Baran Yadav today.

The annual report has categorically stated that governance, irregularities and performance of the state funded development projects have not been improved in recent years.
With Rs 6.59 billion arrears, Ministry of Physical Infrastructure and Transport has the largest arrears – among the ministries – till the end of the last fiscal year 2012-13. It is up by 22 per cent compared to a fiscal year ago in 2011-12, the report revealed, adding that Ministry of Federal Affairs and Local Development, Finance Ministry, Ministry of Education and Ministry of Urban Development are top five ministries with largest arrears.

Ministry of Federal Affairs and Local Development has Rs 4.24 billion, Finance Ministry has Rs 3.18 billion, Ministry of Education has Rs. 2.52 billion, and Ministry of Urban Development has Rs 2.07 billion in arrears, it added.

However, Ministry of Youths and Sports, and Ministry of Law, Justice, Constituent Assembly and Parliamentary Affairs have zero arrears in the last fiscal year 2012-13, the report said.
As a supreme audit organisation, Office of the Auditor General also audits the performance of development projects, said Auditor General Bhanu Prasad Acharya.

“The office found that the government spent Rs 20.35 billion in the last month of the fiscal year 2012-13, though it was scheduled to spend only Rs 9.5 billion,” he said, adding that the lack of budget discipline is increasing.

The President will forward the report to the parliament, where they discuss it in Public Accounts Committee, according to the tradition. But lack of parliament in last two years, the report has not made its way into the discussion among the people’s representatives. “It has also increased indiscipline,” he added.

The annual report has also revealed that the tax exemption has become a serious problem in financial management. “During the fiscal year, the government exempted taxes worth Rs 31.44 billion in the last fiscal year alone for institutions, goods, services, ghee, oil, mobile and exports,” the report said, adding that the government has also returned Rs 7.1 billion to traders in VAT especially in in vegetable ghee, oil and mobile phones.

The 51st report of the Auditor General claimed that VAT credit amount is increasing every year compared to VAT debit amount.

The government has mobilised Rs 54.39 billion in VAT in the last fiscal year 2012-13, of which Rs 17.53 billion stood as VAT credit, which has raised serious question on implementation of VAT.

The government has also failed to recover tax dues worth Rs 84.8 billion as of the last fiscal. The VAT gap stands at 47.5 per cent, the report said, adding the major reasons behind the VAT gap include taxpayers not furnishing actual transactions, use of fake bills, non registration in VAT.

Likewise, due to weak government, some 22 per cent of taxpayers have not submitted their tax details, whereas 32 per cent have showed zero collection of VAT, while 52 per cent showed VAT credit – meaning they have not sold products that they imported through different customs points – which has raised serious question on revenue administration. “The government is yet to recover outstanding revenue dues worth Rs 9.52 billion till 2012-13,” the report added.

Majority of development projects extend contract period

KATHMANDU: The report also revealed that most of the development projects have not been able to complete in time forcing government agencies to extend their contracts. “Fifty-six per cent government contracts were extended in the last fiscal year without any reason,” the report said, “Of the 2,937 contracts of 15 government agencies, some 1,632 projects’ contracts were extended. The trend of contract extension has increased project costs against the Public Procurement Act that has provisioned extension only under conditions beyond control and under reasonable grounds. The government has suffered cost overruns since the contractors didn’t keep to their schedule and it was forced to keep the consultants engaged.”

Likewise, most of the donor-funded projects have spent from 4.40 per cent to almost a quarter at 24.50 per cent on consultants, the report added.

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