Govt expedites settlement of dues of contractors, spends Rs 27 billion in capital expenditure in two months

Published On: March 13, 2024 08:00 AM NPT By: Republica | @RepublicaNepal

Construction activities start to move forward, but at slow pace: Contractors

KATHMANDU, March 13: At a time when contractors have been complaining about delayed payments for their services, the government is found to have expedited their payments over the past two months.

The records with the Financial Comptroller General Office (FCGO) show that the government spent Rs 27.08 billion in the past two months to pay contractors. While the capital expenditure stood at Rs 49.23 billion by mid-January, the amount has increased to Rs 76.31 billion as of Monday. Most of the amount out of the capital expenditure was reported to be used to settle the dues of the contractors.

Rabi Singh, president of the Federation of Contractors’ Associations of Nepal (FCAN), said the government has expedited their payment settlement in recent days. According to him, the government’s move has helped speed up the construction works.

The increase in the capital expenditure has also impacted the collection of government revenue. In the first seven months of the current fiscal year, the total revenue collection was up 10.2 percent to Rs 567.40 billion, according to the government’s records.

In the review period, the government collected a revenue of Rs 13.50 billion under the heading of value added tax in consultant and contract services. Likewise, the private sector lending of banks and financial institutions increased 4.1 percent to Rs 197.21 billion.

Manufacturers and suppliers of construction materials have also reported to have observed an increasing demand for cement and iron rods. According to them, the demand increased by an average of 25 percent in the past two months.

Dhruba Thapa, president of the Cement Manufacturers’ Association, Nepal, said the demand for cement has increased of late. According to him, cement manufacturers have started utilizing 60 percent of their production capacity which used to stand at around 35-40 percent as early as a few months ago.

The payment settlement by the government has also seemed to have impacted the transaction in the realty sector. The records with the Department of Land Management and Archive show that a total of 49,290 units of land plots and houses were transacted in one month during mid-January and mid February. Out of these transactions, the government collected a tax revenue of Rs 3.71 billion.