Over five billion rupees of the allocated budget for the current fiscal year has been returned by various agencies, citing an inability to spend it. According to the Ministry of Finance, most of the returned budget falls under the capital expenditure category.
An agency-wise analysis shows that the Ministry of Energy, Water Resources, and Irrigation, along with the Millennium Challenge Account Nepal Development Committee (MCA-Nepal), have returned the largest amounts of budget.
According to Ambika Prasad Khanal, Information Officer at the Ministry of Finance, a budget of 53.4 million rupees under current expenditure and 5.0381 billion rupees under capital expenditure has been returned. Under current expenditure, the Ministry of Communications and Information Technology returned 9.5 million rupees, the Ministry of Culture, Tourism, and Civil Aviation returned 3.9 million rupees, the Election Commission returned 24.2 million rupees, and the Ministry of Land Management, Cooperatives, and Poverty Alleviation returned 15.8 million rupees.
In terms of capital expenditure, the Ministry of Energy, Water Resources, and Irrigation returned the highest amount, 2.3534 billion rupees, followed by MCA-Nepal, which returned 2 billion rupees. Other agencies returning capital budgets include the Ministry of Industry, Commerce, and Supplies (367.8 million rupees), the Ministry of Foreign Affairs (300 million rupees), and the Office of the Auditor General (16.1 million rupees).
As per the Financial Procedures and Fiscal Responsibility Act and related regulations, if the allocated budget for a project or program cannot be spent by the end of Falgun (mid-March), and if it is unlikely to be spent within the remaining fiscal year, it must be returned to the Ministry of Finance by the end of Chaitra 15 (around March 28).
Last year, MCA-Nepal had returned about 70 percent of its allocated budget, and this year it has returned approximately 58 percent. Despite receiving continuous U.S. government aid, uncertainty remains regarding the future of the project. As a result, the budget allocated by the government for MCA-Nepal remains largely unspent.
For the current fiscal year, MCA-Nepal was allocated a budget of 13.36 billion rupees, of which 9.9 billion rupees was to be received as a grant from the Millennium Challenge Corporation (MCC), and the remaining 3.4518 billion rupees was to be sourced internally. However, due to underutilization, about 58 percent of the budget to be covered from internal sources was also returned to the Ministry of Finance.
This underperformance is not new; even in the previous fiscal year, MCA-Nepal’s expenditure was notably low. Out of the 10.8417 billion rupees allocated, 7.607 billion rupees was returned after only around 30 percent of the budget was spent. The failure to meet budget spending targets was mainly attributed to delays in the distribution and acquisition of land needed for the construction of electricity transmission lines.
