Budget: During the 2014-15 fiscal year more than 21 percent of the capital budget allocated to the different agencies was underutilised.
Against the revised capital budget of Nu 19.6 billion (B), agencies could only use about Nu 15.5B.
While conducting an audit on annual financial statements of the government, the Royal Audit Authority (RAA) has found that such underutilisation of funds would have implications on effective and optimal use of borrowed funds. it could also place a debt service burden on the government, the RAA says.
The budget report also reveals that the government has revised its total expenditure (current and capital) to Nu 41.35B and the actual outcome was Nu 36.47B.
However the budget report claims that the 2014-15 fiscal year ended with a fiscal surplus of Nu.1.89B with Nu 36.2B of resources realised as against the total outlay of Nu 34.33B.
During the year, it was also observed that capital expenditure has decreased as compared to the current expenditure.
This, according to the plan document, was because a need for maintenance of infrastructures already created in the previous plan has arisen.
Thus the RAA has pointed out that the concept of maintenance had not been seriously considered in the earlier Plan.
“Failure to appreciate the importance of maintenance in the prior Plan have led to this major shift in the Plan thrust and downsizing the capital outlay,” the annual audit report states.
In another way, the RAA stated that this could be also linked with absorptive capacity of various agencies to implement capital works and execution of quality construction works as well.
The RAA has also pointed that this kind of shift in the priority could prove costlier in terms of non-availability of requisite infrastructure for industries and commerce to expand. When the capital budget has to be downsized, there is every chance that development might not be able to keep pace with changing and growing needs of the society.
The RAA has recommended that government be prudent and revisit the policy in line with creating adequate infrastructure in the country.
Meanwhile, the finance ministry has issued a notification yesterday stating that the government and other oversight bodies are concerned about the underutilisation of budget. The ministry has thus asked the heads of the agencies to underscore the underutilisation cases through continuous monitoring.
The notification further states that implementation of externally financed projects shall commence only upon receipt of funds.
The ministry has also notified all agencies receiving subsidy and grants from the government to enhance internal revenue, as it will be difficult for the government to provide subsidy.
The ministry of finance has also asked the agencies to submit work plans and quarterly progress reports of capital budget. This is as a part of monitoring exercise.