All is not well

The government’s final accounts for 2009-10 show that 22% of the approved budget was unutilized. Of that about 7% was for current expenditure. And a whopping 33% was money budgeted for capital expenditure.

But it’s not just last year, accounts for 2008-09 show that the government did not utilize 35% of the capital budget.

The government has a range of excuses for the huge deviation between funds budgeted and funds utilized. They point out that it is not always possible to predict when donor funds that have been committed are actually made available. They complain about the continued shortage of technical personnel, especially engineers. They fault the private sector for being weak and unable to undertake government contracts. And they complain that they are constrained by a lack of implementation capacity in the local governments.

But, overall, the government maintains that such lapses in expenditure are okay. They say that money not utilized one year will spill over to the next; that work that’s unfinished in one year will continue in the subsequent years.

Annual budgets provide a cost estimate for activities that will be undertaken in that year. And because they are estimates, they do not always match actual expenditures. But the deviations must be within tolerable limits. Otherwise the whole purpose of budgeting is lost.

Differences of 33% and 35% between budgeted and actual capital expenditure are not mere deviations. They are huge differences that indicate a failure in the budgeting system. Either our planning is weak. Or our implementation is bad. More likely, it’s both.

What’s disturbing is that this failure is chronic – every year we seem to underperform by unacceptably big margins.

What’s more disturbing is that this failure is systemic – last year’s accounts for capital expenditure show that the 10 central ministries underperformed by 30%, the 28 autonomous agencies by 40%, and the 20 dzongkhags by 30%.

But what’s most disturbing is the government’s attitude that all is well.

 

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  1. YPenjor says:

    It sounds a MRV (montoring, review and verification) is high time on the stand of the government. If the govt stand turns out to true, corrections need to be placed in the system of implementation of the plan activities. If the govt’s statement turns out to false and for eye-wash, re-think standing infornt of the Electronic Voting Machine (EVM) in March 2013. The biggest question then will be, will PDP or anyother Party do better than DPT?

  2. if one watches closely, one will observe that in matters of finance in parliament, the discussions are almost always lengthy..
    lengthy bcoz year after year, fin minister wangdi norbu, gives the same presentation, same justifications & the same excuses..
    same excuses bcoz mistakes in figures presented to parliament,un-optimal utilization of budget, huge variances in budget vs actual spending & passive tax & economic policies are repeated year after year..
    year after year, we hope for dynamic economic policies.. but year after year we get the same fith.. that finance man’s gotta go..

  3. tangled says:

    I see a declining trend in the under utilization.35 %in 2008-2009 and 22% in 2009-2010. How high was it in previous years?

    And as for the reasons given for under utilization, we all know that they are true. What are you driving at? Should we just spend and fulfill expenditure projections or make sure that we spend responsibly? Or are you just hitting at the govt even though you know full well the reasons for the differences?

  4. waitosa says:

    It is not the government’s attitude that is worrying but yours. Perhaps, the first line of your manifesto in 2013 should read: “Ensure a zero balance budgetfor all agencies to restrict their innovation and flexibility”

  5. Latoya Mistral Ferns says:

    Mr. Tobgay, you are so very fortunate that the apex of your budgetary problems is under-utilization. And I can see why you think its a problem. In the long run we are all dead and the government should definitely put its funds to optimal use. However, I also believe tangled is right when it comes to the implications of his second question alone. Its important to spend responsibly, something my own governments have failed to do, incumbent and previous ones. Much or our budget lines insidious private pockets. Having said that Mr. Tobgay, I do admire your governments which have performed so well that they consistently rank above India, China and the rest of the subcontinent, and one of the reasons is that they are kept in check by an opposition such as yours. I will be in Thimphu until the 7th or so of September and look forward to interviewing you for my research project like I told you on Twitter. I have also secured an interview with Lyonchen. May I send you the same list of questions for a balanced point of view from both leaders? My number is 17305590. Do send me yours via text.

Trackbacks

  1. […] The current practice of approving annual budgets submitted by the dzongkhags is cumbersome. And it is restrictive. That’s part of the reason why local governments have not been able to make full use of their capital budgets. […]

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