THE Finance Division has warned ministries and divisions of fund suspension in case they fail to comply with budget implementation measures. This is a step, which the Finance Division announced on its web site on September 11, aimed at increasing the implementation rate of the budget. The fund suspension would come into force in the second quarter of the 2026 financial year if the entities fail to submit respective budget implementation plans by the first July鈥揝eptember quarter. The ministries and divisions would also run to fund suspension in the last quarter if they fail to spend 60 per cent of the allocation in the first three quarters. The government has, therefore, asked the entities to submit the budget implementation plans by September and to submit the budget implementation status in the first month of every quarter. The budget implementation rate has always been lower than the full annual allocation, which averaged 81鈥�86 per cent between the 2009 and 2024 financial years. And, in the 2024 financial year, the rate declined to 79 per cent amidst challenges such as an ambitious development expenditure target, limited government capacity and a failure to meet the revenue collection target.
Officials say that the compliance of the ministries and divisions with the directive would ensure the maintenance of fiscal discipline and avert imbalance between the income and the expenditure, noting that lack of proper planning causes the income-expenditure imbalance and adds to the borrowing costs to meet the revenue shortfall. There should, of course, be some action against the failure of the ministries and divisions in case they fail to comply with the budget implementation measures. And, fund suspension could be an option. But, a blanket fund suspension may not increase the implementation rate of the budget and it would be the people who would suffer if the ministries and divisions did not receive the fund for implementation. The government should, rather, mind the issues of efficiency and capacity of the ministries and divisions in budget implementation. Much of the failure in budget implementation lies with the inefficiency and limitation of the officials responsible for budget implementation. If the ministries and divisions are not adequately efficient, fund suspension would not yield any results. The government should, therefore, attend to such issues before planning on other ways to make the ministries and divisions behave. Added to this are the inefficiency and weaknesses in planning, which often cause time and cost overruns in the implementation process.
The government may well plan on action against the ministries and divisions for their failure in budget implementation aimed at the maintenance of fiscal discipline and avoidance of any imbalance between the income and the expenditure. But the government should attend to the issues of inefficiency and weaknesses of the entities in budget implementation before planning on other measures.
