HEADLINE NEWS THE RISING NEPAL (DAILY)

Rs 38B unaccounted
Audit report shows lack of fiscal discipline

BY A RITU RAJ SUBEDI

Kathmandu, Sept. 30: Ever increasing unsettled account in the governmental and non-governmental institutions is an indication that successive governments, despite their repeated verbal commitments, have failed to maintain fiscal discipline in the country.

The recent report released by the Auditor’s General Department (AGD) presents unsettled account at a mind-boggling amount of Rs 26.4 billion that stands 6.60 per cent of the total audited amount of Rs. 122 billion this year.

However, if one adds the unsettled account of Rs 12.1 billion of other bodies such as committees and other government organisations and District Development Committees, the country’s total unaccounted expenses reaches to Rs 38.42 billion.

It might be mentioned that this amount presumed to be of those agencies that spent under legal procedure.

Ironically, the Ministry of Finance that is supposed to spearhead the nation’s fiscal discipline, tops the list with 38.79 per cent of the total unsettled amount followed by the Ministry of Physical Planning and Works and Ministry of Water Resources with 10.47 per cent and 10.03 per cent respectively.

Though such irregular amount can not be straightforwardly dubbed as corrupted amount, it is sure as the report describes that institutions had openly disregarded basic economic discipline and the instructions for auditing of the AGD.

"This signifies a total lack of fiscal discipline at the decision-making, political and administrative levels," said Dr. Badri Prasad Shrestha, a noted economist.

"Although the unsettled accounts cannot be called as corruption in the direct sense, but there is a high possibility of corruption by not keeping the accounts on time," added Dr. Shrestha.

He even said that the government and other agencies often violate the economic rule to create unsettled accounts.

However, Dr. Bishwombhar Pyakurel said that only one per cent in the total unsettled expenses accounts for corruption. "About 7 to 8 per cent of the total budget of the country forms doubtful unsettled account or bad loans that can not be recovered," added Dr. Pyakurel.

He further said that it was due to the violation of internationally accepted financial norms and values, the concerned bodies create such unsettled account in the economic sector. "They often violate such norms for corruption."

"Such rising of irregular account would have negative impact not only on the overall development project but also on the regular expenditure of the country," said Dr. Pyakurel said

The reasons behind the increase of the unsettled account are many. Dr. Shrestha stated that there is a lack of central accounting system to determine the exact income and expenditure on the country and this could be one of the main reasons for the unsettled accounts.

Dr. Pyakurel attributed bad governance for the rising of unsettled account. He also pointed out to the lack of mechanisms to take accountability.

One simple example of violation of economic discipline is here. The Economic Administration Act-2056 clearly speaks that the concerned offices have to take advice from AGD in the matter of auditing their expenditure if they have to enter into any agreement related to foreign assistance.

The Finance Ministry is bound to send one copy of agreement to the Department within fifty days of agreement, according to AGD’s instruction.

However, the Ministry has not taken any advice from the Auditor General’s Office while entering into 32 agreements of such kind this year. The Ministry has also not sent copies of six agreements to the Department so far, said the report.

Likewise, the Ministry has not stated about auditing in 16 accords. In two agreements, the Ministry had to include the grants into the national budget and submits the report of its auditing to the donor agencies. But the Ministry has failed to do so, stated the AGD report.

It is not that the government lacked the legal apparatus to settle the expenses from the institutions and individuals and take stern action against if they fail to do so.

It is rather the government’s indifference and lack of commitment that have always let defaulting agencies go Scot free and out of legal bondage, said the experts of this fields.

It is the inertia on the part of the government that has led to the increasing of the unsettled account, said Dr. Shrestha. He suggested to implementing the existing laws efficiently than to formulate new laws only to check the unaccounted expenditures.

Dr. Pyakurel also pointed out the need of a strong mechanism and, moreover, the determination to check the rising unsettled account in the country.

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