Saturday, 2 December, 2023

Cut Wasteful Public Expenditures

Mukti Rijal

The federal governance arrangement in Nepal has been defined by inter-tier allocation of the functions with national, provincial and local levels exercising their constitutionally assigned mandates and competencies. According to the federal arrangement, several apparatuses and agencies controlled and managed so far by the central (federal) government have to be either disbanded if they are irrelevant, repurposed or transferred to the purview of the sub-national governments-Pradesh (state) and local for their resource efficiency, effective operation and management.

As per the report of the unbundling of the functions of the federal, provincial and local government carried out by the Office of the Prime Minister and Council of Ministers (OPCM), the principle of subsidiarity has been respected and adhered to with regard to devolving some of the central level functions and responsibilities to the provincial and local government through transfer of mandates, competencies, assets and personnel. This has been done especially with a view to attaining cost and resource efficiency and enhances effectiveness in the process of governance and service delivery.

Principle of subsidiarity
However, these federal constitutional expectations and arrangements premised upon the principle of subsidiarity have not been adequately addressed as evidenced by the huge bureaucratic apparatus yet far retained at the central level and indiscriminate creation of the ad hoc bodies and agencies at different levels thereby putting pressure on public expenditures. The federal, provincial and local governments are generally inclined to respond to the emerging problems and issues with the creation of new agencies, new programmes, and new spending initiatives, instead of reorganising, or repurposing what is already available within the existing set up or institutional arrangements.

As a result, there are several programmes, projects and activities operated and handled by the governments that have allegedly outlived their mission and objectives, duplicate efforts and resources, or operate below peak efficiencies. This wasteful spending has been a contributing factor to the deteriorating fiscal health and discipline as reflected in the annual reports of the Office of the Auditor General (AoG) and Public Expenditure Review Committees (PERCs) constituted by the previous government, among others.

Hence, there is a need to review the patterns of the public expenditure in the country. Needless to repeat, the federal governance arrangement has started to function for the last four years. This arrangement emphasises on the need of implementing practical and feasible measures in cutting wasteful public expenditures and promotes resource efficiency and effectiveness in governance and service delivery.

In this context, it would be in order to outline some of the widely applicable guidelines and standards on which broad action to reduce tax payer money should be based and executed: In order to stop wasteful and unnecessary spending all government programmes should have a direct, clear, and immediate purpose and not duplicate other programmes. Likewise, all government spending should provide a necessary and essential public service, and serve a clearly defined need, demands and interest of the people. In the contemporary democratic world, taxpayers expect and deserve a government that is not spending taxpayer money to support the projects and programmes that are unrelated, irrelevant and wasteful.

All public spending whether they are big or small should fund their intended purpose and reach the targeted recipient. In fact, there should not be any improper payments that result in monetary loss to the public exchequer. The government should be frugal and strive to avoid overpaying to finance materials, projects and activities. The government should spend only the amount necessary to achieve intended objectives and goals, and all expenditures should be assessed on that basis.

Using the above mentioned guidelines, public spending should be geared to restrain and refocus taxpayer resources. The government should eliminate all the duplicating and overlapping projects and programmes. The programmes and projects that do not yield intended results and outcomes should be either avoided or repurposed and eliminated. All illegal, improper and irrational payments need to be revoked for proper utilisation of the public resources. Moreover, an effective oversight of public spending should be conducted to minimise and eliminate wasteful expenditures.
The most important measure for eliminating wasteful expenditure is to stop hasty and unwise end-of-financial year spending. The Public Expenditure Review Committee, headed by economist Dr. Dilli Raj Khanal, in its report had made recommendations to reduce overlap, duplication, and fragmentation in the programmers. The PERC report identifies opportunities for cost savings, and a better effective and efficient service delivery for the people, through addressing several types of common inefficiencies in government.

Service delivery
When more than one government agency, or more than one component within an agency, is involved in the same broad area of national need and there are opportunities for reform towards improving service delivery. When multiple agencies or programmes have similar goals, engage in similar activities or strategies, or target similar beneficiaries, the overlapping agencies can be downsised or eliminated.

The government should address many of these inefficiencies by reforming, reducing the funding for, and in some cases, eliminating these programs. Very appropriately, PERC report proposes to reorganise, consolidate and even eliminate overlapping projects and programs with a view to cut leakage and wasteful expenditure. These measures would allow the public programmes, projects and activities to meet and address the expectations of the people and save resources to support the needy people. The new finance minister has initiated some steps towards cutting wasteful expenditures, disuse of resources and materials at least at the federal level which should be appreciated.

(The author is presently associated with Policy Research Institute (PRI) as a senior research fellow.