ILLUSTRATION: KATMANDU JOURNAL
IN THE final weeks of Nepal’s fiscal year, which ends in mid-July, the country performs its annual farce. As the monsoon turns hills and plains into mud, gangs of workers swarm the roads. They pour fresh tarmac into driving rain, knowing it will be stripped away long before the autumn festivals arrive. This is the “July rush”: a panicked, wasteful dash to empty the treasury before the budget year expires. It is administrative failure, laid bare.
In a typical year the government spends more of its capital budget in the final month than in the first six put together. Sometimes as much as 40% of annual infrastructure spending is rammed into those last 30 days. The consequence is predictable: shoddy work, swollen bills and rich pickings for fixers. To a casual observer it looks like sheer incompetence. In fact, the July rush is a logical reaction to a plainly stupid system.
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The real cause is bureaucratic paralysis. At the centre is the finance ministry, which treats the treasury as a stash to be guarded, not a tool to be used. Because revenues wobble, it falls back on crude cash rationing, hoarding money until the very end. For officials in line ministries this means months with empty accounts, followed by a sudden flood of cash in June. By then it is too late to build properly—and impossible to refuse the money.
Fixing that means you need a shift in power. Today the finance ministry micromanages every rupee. If a department wants to move money from a stalled project to one that is racing ahead—an adjustment known as virement—it must run a months-long gauntlet of approvals. This is absurd. Line ministries should be free to reallocate, say, up to 25% of their capital budgets within their own portfolios, without crawling back to the centre for permission.
The ban on moving funds in the first and last months of the year should also go. These so-called blackout periods are meant to curb abuse, but in practice they freeze managers when flexibility matters most. If a project is ready in July, let it start. If a contractor needs a final payment in June to finish a bridge, pay it.
The second culprit is a procurement system that crawls at the pace of a retreating glacier. In Nepal it takes, on average, 231 working days to stagger from announcing a tender to signing a contract—the worst delay in South Asia. The cause is a paralysing fear of decision-making. Every estimate and bid is kicked upstairs, ending up on the desks of senior officials who have never set foot on the project site.
The outcome is a race to the bottom. Contractors lodge suicidal low bids simply to win, confident they can recoup profits later through delays and endless “variations”. Regulators should be able to throw out these bids. Just as important, the power to approve small changes must move to the people on site. If a project manager cannot sign off a routine tweak to a sewer line without Cabinet blessing, they have no business running a project at all.
Foreign-funded projects endure their own special hell. They tend to stall because the Nepali government drags its feet on providing the required “counterpart” funding. The fix is this: let donor money flow even if the domestic share is a little late, as long as there is a written promise to pay up. Holding up a multimillion-dollar bridge over a few thousand rupees of co-financing is classic penny-wise, pound-foolish.
Some argue, with grim logic, that the July rush suits everyone. Politicians get their ribbon-cuttings; contractors get cover for shoddy work; bureaucrats dodge blame for a slow start. But the price is paid by ordinary Nepalis. Every road that washes away in August is a school not built, a hospital left short, a promise broken.
Nepal’s leaders love to talk about a “Prosperous Nepal, Happy Nepali”. That will stay a slogan, not a reality, as long as state spending is driven by the calendar instead of the country’s needs. The government must stop behaving like a jittery accountant and start behaving like a competent builder. It needs to swap its current system of “control through paralysis” for one of “oversight through results”.
The July rush is not a force of nature like the monsoon; it is a creation of man. It can be stopped with a few laws and a measure of trust in institutions. If the government can plan its cash, delegate authority as well as sort out procurement, then next July the only thing rushing down the hillsides will be the rain. ■
