KATHMANDU: Due to insufficient budget allotted for the current fiscal year, contractors in Nepal have put a stop to their operations. A notice has been released by the Federation of Contractors’ Association of Nepal (FCAN) asking its members to halt operations until the government furnishes adequate funding to refund unpaid invoices. According to FCAN President Rabi Singh, contractors won't move forward unless the government provides assurances that there will be sufficient funding.

Just Rs 15 billion were made available by the government in the last week of the fiscal year 2023–2024 to pay contractors. Due to the Ministry of Finance's (MoF) inability to cover all financial obligations, contractors still owing Rs 20 billion for finished work. The government has come under fire from contractors for giving development projects inadequate funding while accruing large debt.

In order to build a postal route that connects the districts of Banke, Dang, and Bardiya, for instance, the government must set aside Rs 1.29 billion. The FY 2024–2025 budget, which includes Rs 30 million for administrative costs, is just Rs 780 million. The contractors require improved financial planning as a result of this shortage, which intensifies their financial problems.

The government has a history of underusing development monies that have been allotted to it. Just Rs 191.71 billion, or 63.47 percent, of the Rs 302 billion capital expenditure allocation for the preceding fiscal year was actually spent. Contractors have expressed unhappiness about the practice of shifting large budgets at the end of the fiscal year, as demonstrated in mid-May and mid-July of FY 2023/24. They want more efficient and transparent financial management.

The MoF has stated that arrangements were made to address contractor dues during the last fiscal year’s fourth quarter. However, MoF spokesperson Uttar Kumar Khatri emphasized that it is now the responsibility of the line ministries to handle the payments. The contractors are calling for a clear plan from the government on how their dues will be settled, whether through budget transfers, borrowings, or other means.