Government’s arrears increase by Rs 95.60 bn in fiscal year 2022-23, total reaches Rs 669 bn

KATHMANDU: The government’s financial arrears have surged by Rs 95.60 billion in the fiscal year 2022/23, bringing the total arrears to a staggering Rs 669 billion, according to the 61st annual report of the Office of the Auditor General (OAG) unveiled on Sunday.

The report highlights a significant increase in arrears compared to the previous fiscal year. Although the amount is lower than the Rs 119.77 billion increase recorded in FY 2021/22, it still underscores the persistent issue of financial irregularities within government operations.

Financial transactions conducted without the necessary documentation and procedural compliance are classified as arrears. The consistent rise in arrears indicates a heightened risk of corruption within the concerned government bodies. The OAG’s report reveals that arrears grew by 16.28 percent last year, compared to a 21.45 percent increase the year before.

The arrears cover the cumulative amounts from federal, provincial, and local governments. In the last fiscal year, the OAG audited transactions worth Rs 7.881 trillion across 5,605 state-owned enterprises, institutions, and committees from all three levels of government.

Of the total arrears added last year, Rs 46.54 billion was attributed to federal government institutions. The OAG conducted financial assessments of 3,277 federal entities, auditing transactions worth Rs 2.461 trillion. Provincial government institutions recorded arrears of Rs 6.57 billion out of the Rs 323.34 billion audited across 1,270 entities. The remaining arrears were associated with local government bodies and other state-owned enterprises.

The OAG has categorized arrears into three types: recoverable, to be regularized, and advances. Recoverable arrears include misappropriated funds, losses, and amounts pending recovery.

Arrears to be regularized involve transactions lacking adequate documentation, improper process adherence, unauthorized expenditures, and non-reimbursed amounts. The advance category includes funds taken in advance by civil servants and expenses for mobilization.

According to the OAG’s report, recoverable arrears constitute 24.47 percent of the total amount, while arrears to be regularized make up 68 percent. Misappropriated amounts account for 18 percent of the total arrears.

The report also raises concerns about tax discounts worth Rs 341.74 billion provided by the Ministry of Finance (MoF) and related institutions over the past five years. The MoF has been criticized for failing to maintain proper records and not conducting thorough assessments when granting these tax discounts.

Furthermore, the MoF and its associated offices are yet to recover Rs 415.03 billion in revenue dues, including principal amounts and interest on loans provided to various government entities.

The significant increase in arrears highlights the urgent need for improved financial management and accountability within government bodies. The OAG has called for stricter adherence to financial regulations and better oversight mechanisms to curb the rising trend of financial irregularities.