Central bank governor Dr Yubaraj Khatiwada stressed on the need to increase capital expenditure spending.
Since last couple of years, the government’s spending capacity has eroded making the government treasure budget surplus. For the current fiscal year, the government had earmarked Rs 85.10 billion under capital spending. But the government has been able to spend only Rs 26.26 billion or 30.86 per cent in the first nine months.
“We fail to allocate financial resources properly,” he said, adding that the low spending capacity has made the government not been able to mobilise the resource effectively.
Addressing an interaction organised by Institute of Chartered Accountants of Nepal, in the valley here today, he also asked the government to enhance spending capacity.
Though, the under spending has been attributed to lack of efficient public financial management system, apart from deficiency in budget planning, formulation and execution, some modification in the working culture of the private sector is important to expedite capital expenditure, the governor said, blaming the contractors for their failure in completing their works on time despite timely release of funds. He also suggested change in the current trend.
Likewise, senior economist Dr Posh Raj Pandey, on the occasion, stressed on the need to enhance institutional capacity of the government bodies.
“The first generation of economic reforms focused on liberalisation of various sectors,” he said, adding that the second generation, will however, should focus on building institutional capacity and complete unfinished agendas of the first generation of economic reforms like labour market reforms. “The government should also focus on ensuring policy stability, supply of adequate amount of electricity, expanding transport network, reducing corruption and discouraging anti-competitive practices like cartelling.”
Economic advisor to the Prime Minister Sushil Koirala Dr Chiranjibi Nepal, meanwhile, said that Nepal lagged behind in development due to its inability to introduce various reform measures on time.
He blamed the political leadership, which does not seem to have a long-term vision on economic development. “The government should focus on creating jobs, taming inflation and achieving sustainable economic growth,” he added.
Nepal is facing low economic growth, high unemployment and increasing inflation in recent years. Senior economist Dr Bishwambher Pyakurel, on the occasion, said that the country is facing stagflation.