The RAA says most of the budget underutilization cases arise at the local level

Budget: In what is a matter of concern for planners and implementers, most government agencies continue to return a substantial amount of unused budgets to the finance ministry at the end of every fiscal year.

Last year, government agencies returned Nu 2.82B (billion) of the capital budget from the allocated budget to the finance ministry for various reasons, according to the annual audit report 2014. The Royal Audit Authority (RAA) had carried out the certification audit of annual financial statements of the government for the year ended June 2014.

The total revised budget for the government last year was Nu 19.488B. This means that about 14 percent of the total budget was returned to the government last year by various agencies and local governments.

“Since more than four percent of the overall expenditure are financed through loans, the underutilisation of funds would have implication on effective and optimal use of borrowed funds and also on debt-service burden on the government,” the RAA report states.

The previous audit report had pinpointed local governments, stating that most of the budget underutilisation cases were at the local government level.

The issue of underutilisation was raised in one of the gewogs Prime Minister Tshering Tobgay visited recently. A local leader from Tsirang said that the Prime Minister advised the local leaders in Tsirang dzongkhag to make best use of budgets, including gewog development grant (GDG), allocated by the government and not to return it to the government.

His gewog returned about Nu 200,000 last year.

Barshong gup Santa Lal said that some of the gewog returned budgets  because of lack of proper planning by the gewogs. However he said that there is no question of returning the scarce budget if it arrived on time. He said his gewog implemented all the allocated budgets last year.

Others said that it takes time to implement because of the procedures involved like obtaining clearances from agencies such as national environment commission and the department of forests.

The issue was also discussed in the recently concluded Dzongkhag Tshogdu in Zhemgang. Zhemgang Dzongkhag Tshogdu Chairman Kinzang Jurmey said the delay in releasing budget from the finance ministry was the main cause of underutilization.

“The good thing is that even if a budget does not come in the year, it can be released the next year,” Kinzang Jurmey said. He also attributed ad hoc planning at the gewog level for the underutilization. “When works are planned on ad hoc basis, we can’t implement immediately and the money has to be returned,” he said.

The issue of non-utilisation of capital budget is being raised in annual audit reports every year since it would have implications on effective and optimal use of borrowed funds, states the report.  The report also states that budget under utilisation increases debt-service burden on the government.

In order to avoid such underutilisation of budget, the report suggests that regular progress report of all planned activities should be submitted to relevant offices. It also states that flaws in budgeting system, overambitious budget planning, low capacity of the implementing agencies and ad hoc planning as reasons for the underutilisation.

The finance ministry issued a notification earlier stating that the issue of budget underutilisation is a serious issue and that heads of concerned agencies should be made accountable. “The government is of the view that persistent underutilisation of budgets may also affect subsequent years’ budget allocation,” the notification warned.

The RAA report 2014 states that the underutilisation of funds mobilized through loans would have implication on effective and optimal use of borrowed funds and also on debt-service burden on the government.

More than 30-40 percent of the overall expenditure budgets come as grants and about 3-7 percent are financed through loans.

MB Subba