Current and Capital expenditure patterns: trend analysis of the past five years (Gandaki Province)
The budget pattern for five years (2018/19 A.D. to 2022/23 A.D.) highlights the trend wherein the total budget allocated for Gandaki Province has been on a constant rise as can be seen in Figure 1.
Source: Budget Statements of Ministry of Financial Affairs, Gandaki Province (2018/19-2022/23)
The projected budget, varying from 24.02 billion in the fiscal year 2018/19 to an estimated 35.9 billion in the fiscal year 2022/2023, implies a general increasing trend over the period. A drastic decline can further be noted with an estimated budget of 30.05 billion for the fiscal year 2021/2022 (Figure 2). When extending the analysis to 2021, we find that the COVID-19 shock severely impacted on the budget and furthermore, results have been significant and persistent.
Expenditure Patterns
Expenditures authorized under a province budget are divided into three main categories i.e. Current Expenditure, Capital Expenditure, and Financial Expenditure (Figure 2).
Source: Budget Statements of Ministry of Financial Affairs, Gandaki Province (2018/19-2022/23)
Analyzing Current Expenditure Patterns
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Source: Budget Statements of Ministry of Financial Affairs, Gandaki Province (2018/19-2022/23)
Figure 3 presents the trends of current expenditure for the period between 2018/19 to 2022/23. In 2018/19, the average share of actual expenditure percentage was 64.24% of the allocated budget of NRs. 8.11 billion which was the highest expenses over five years. Likewise, the expenditure percentage expended to 56.18% in 2019/20 and 56.12% in 2020/2021 respectively (indicating 56.12% of the allotted NRs. 14.34 billion as usage. Comparably, expenditure percentage i.e. 58.23% of the allotted NRs 13.08 billion in 2021/22 and 66.52% of NRs 12.55 billion in 2022/23 was increased subsequently.
Analyzing Capital Expenditure PatternSource: Budget Statements of Ministry of Financial Affairs, Gandaki Province (2018/19-2022/23)
Figure 4 presents the trends of capital expenditure for the period between 2018/19 to 2022/23. This has been expressed in terms of the capital expenditure percent of the allocated budget. As seen in the figure 5, in 2018/19, 54.74% of the allocated budget of NRs. 15.91 billion was spent on capital expenditure. The following fiscal year, 2019/20, saw a significant increase in the expenditure to 67.93% of NRs. 20.59 billion and in FY 2020/21 to 88.02% of allocated NRs. 19.99 billion. Comparably, the expenditure surged to 86.43%, signifying a higher utilization of the allocated NRs. 16.73 billion in 2021/22. Lastly, in 2022/23, the expenditure decreased to 66.78% of the allocated NRs. 22.85 billion.
Despite increased allocations in subsequent budgets, the budget formulation process suffers from allocative inefficiencies and inadequate spending capability of the Gandaki province government both in terms of quality and quantity. However, Gandaki Province has consistently failed to utilize even one-fifth of the total allocation within the initial six months of budget implementation over the past six years, indicating a significant challenge in the expenditure of allocated budgets.
