Nepal’s unpaid public debts have swollen into a familiar national embarrassment. The latest annual report from the Office of the Auditor General showed that total arrears have reached Rs 755 billion, with another Rs 88.09 billion added in just one fiscal year. The report, submitted to President Ramchandra Paudel, laid bare a system that has wasted public money. Of the newly added arrears, federal offices alone have accounted for Rs 53.49 billion, while provincial offices, local governments and other public bodies make up the rest. Even after recovering Rs 14.63 billion from old dues, the pile has kept mounting. The audit covered Rs 9,484.5 billion worth of accounts across federal, provincial and local institutions. Yet even this scrutiny was incomplete because 179 offices failed to submit accounts, leaving Rs 147.9 billion beyond audit. That should alarm authorities. The report also pointed to a troubling concentration: the Ministry of Finance alone held 70.37 per cent of total arrears, followed by ministries dealing with roads, land management, forests and communications. These ministries are regarded the institutions that shape the nation’s development spending. Arrears in Nepal are symptoms of a deeper governance illness. Every year, ministries spend public funds overlooking rules, delaying documentation, failing to settle advances, or launching projects without proper procurement discipline. The same weaknesses show up in the same agencies because the system rarely punishes anyone. Audit findings are treated like annual rituals and are thought to be unpleasant and are soon forgotten.
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Several factors keep the arrears rising. The first is weak financial discipline. Government offices often release funds at the end of the fiscal year in a mad rush to spend budgets before they lapse. This “Asare spending” culture has given rise to inflated bills, rushed contracts and incomplete documentation. Second is poor institutional capacity. Many local bodies still lack trained financial officers, while procurement units are under-resourced and politically pressured. Third is political interference. Projects are pushed for patronage, not need, and oversight gets sacrificed when the politically connected are involved. The economic cost thus goes far beyond our imagination. Arrears lock public money in unresolved transactions, reducing fiscal efficiency at a time when Nepal already struggles with low capital expenditure and sluggish growth. Investors find such reports threatening to them. They also do not guarantee transparent contracts. Development projects slow down because disputed payments, irregular procurement and pending settlements delay project implementation. Meanwhile, such a situation may lead to erosion of public trust. Citizens find their taxes going down the drain through mismanagement. This is where the new government under Balendra Shah faces a test. Promising clean governance is easy, as many past governments arrived with such slogans. But the delivery part has proved an uphill task for any government.
There are some measures that the government should begin with. A mandatory real-time digital accounting across all ministries and local bodies is necessary. Ministries, departments and offices should be made liable to punishment and penalties if they delay submitting accounts. Ministries with chronic and outstanding arrears, especially Finance and Physical Infrastructure, need special audits, not routine file checking. Officials responsible for repeated irregularities should face action and prosecution where warranted. Parliament’s public accounts committees must stop acting like ceremonial bodies and hold monthly hearings on unresolved arrears. Nepal does not lack audits but lacks implementation of outcomes. Until that changes, arrears will keep rising, reports will keep thickening, and public money will keep vanishing into the swamp of administrative carelessness. Though the current state of arrears appears huge, it will serve a clear message – if a nation cannot account for and recover its money, it will come across many challenges while governing the nation and building its future.
