GR Funds used for capital works in Paro: RAA

By Tashi Namgyal

Thimphu

The finance ministry transferred Nu 19 million (M) from the General Reserve (GR) Fund of the Local Government Election budget to fund capital works under various gewogs in Paro Dzongkhag during the last financial year, according to the Annual Audit Report 2020-2021.

Dogar, Naja and Shaba gewogs which fall under the finance minister’s constituency got Nu 4.5M, Nu 7M and Nu 2M each respectively. The two other gewogs of Dopshari and Doteng each got Nu 3M and Nu 2.5M and falls under Lamgong-Wangchang constituency.

According to the report, the funds were transferred for various capital works which included maintenance of irrigation canal, construction of a lam’s residence and farm road, blacktopping of a farm road, and improvement of a farm road.

The GR Fund is an amount set aside to meet unforeseen, unavoidable and unexpected future expenditure or other financial obligations, according to the national budget report. While the GR budget is provisioned for activities common across budgetary bodies, it is implemented only after fulfilling established criteria and formalities. The GR budget is transferred to the budgetary agencies through technical adjustments.

The MoF had set aside Nu 3,335.997M as GR for the financial year, the report stated that while 46 percent of the GR fund transfers accounted for Covid-19 containment measures under disaster contingency, funds reserved for local government elections were transferred to meet normal capital expenditure in Paro without fulfilling the established criteria and formalities.

The Royal Audit Authority (RAA) pointed out that the activities were neither unforeseen nor unavoidable. “Such activities should have been covered in the annual work plan of the gewog administrations through the normal budgetary process.”

Besides diverting the funds provisioned for LG elections, RAA pointed out that the Nu 4.5M used to improve a farm road from Sali to Sili Goenpa deviated from the road design standard of the Road Classification Standard of Bhutan 2017.

According to RAA, such instances indicated a lack of clear policy guidelines to use the GR fund. “In absence of clear policy guideline regulating the use of the GR fund, the RAA could not ascertain the legitimacy and admissibility of fund transfers from the GR,” the report stated.

MoF responded to the audit report that the GR fund transfer was made based on checklist of criteria adopted within the delegation of financial authority and based on the existing government policies.

It stated that it follows some general basis to determine the budget provision, which includes ad-hoc special priority projects.

The ministry stated that recognizing the importance to have proper guidelines to ensure uniformity and parity in the distribution of general provisions, the Department of National Budget is in the process of further strengthening the process. “A guideline has been drafted and finalized for implementation.”

In contrast, the RAA pointed out that the draft guideline does not clearly specify the delegation of financial powers for sanctioning funds from the GR. “The draft guideline also does not specify the process and admissibility of funding activities other than those provisioned for.”

The RAA also recommended the ministry to establish clear criteria on the admissibility funds from the GR, including the accountability process in the event of diversion of the fund to activities and programmes not included in the GR.