The capital budget utilisation rate dropped in the first three quarters of the fiscal year 2020-21 although the actual expenditure saw a significant increase, according to the budget performance report for the third quarter.
The actual expenditure at the end of the third quarter was Nu 16.118 billion (B), which is 37 percent of the revised capital budget of Nu 43.984B. During the same period in the previous fiscal year, the actual capital expenditure stood at 46 percent.
However, the actual capital expenditure for the same period rose by 45 percent from Nu 11,133B. “The increase is because of incorporation of loan-funded programs, activities, repayment and additional equity injection under the National CSI Bank,” states the report published by the Department of National Budget (DNB).
The low budget utilisation rate has been a concern for the government as it has ramped up government spending to offset the impact of the Covid-19.
The most significant change in the capital expenditure was seen on the purchase of office furniture and equipment, which saw a 48 percent decrease. But the expenditure under the heads of “repayment” and “others” increased by 143 percent and 125 percent respectively.
The capital expenditures on “training and awareness” programmes and vehicles saw a decrease of 9 percent each. The actual expenditure on structure increased by 22 percent.
The capital budget utilisation as of the end of the second quarter of the fiscal year was 16 percent, according to the report for the first half of the fiscal year.
The report highlights the budget performance for the third quarter including domestic revenue and grants realized and loans contracted to finance the fiscal deficit.
Through the report the DNB seeks to inform the government, citizens and other stakeholders on the performance of the budget to enhance transparency in accordance with the global practices as well as the responsibility bestowed upon by the Public Finance Act.
The revised current expenditure as of March 31, 2021 was Nu 32.788B, while the actual current expenditure was Nu 35.525B.
Of the revised current expenditure, the actual expenditure for the third quarter was Nu 22.808B, which is a decline of 6 percent from the same period of the previous year.
According to the report, the decrease in current budget was mainly on the account of rationalisation of the current budget in line with the revenue performance, which was affected by the Covid-19 pandemic.
The most significant change in the current expenditure was in grants and subsidies, which decreased by 40 percent. The operations and management expenditure also decreased by 23 percent.
“The decrease is because of rationalisation of current expenditure to reduce wasteful expenditure and allocating only in areas where it is absolutely necessary,” the report states.
However, interest payments increased by 202 percent, indicating a significant growth in borrowings.
Edited by Tshering Palden