Kathmandu. The work of preparing the budget for the financial year 2080/81 is going on. Everyone is interested in what kind of financial policy the government will prepare to support the economy that has not been managed since the Covid epidemic. The first priority now is to fill the air and create new hope in the withered economy.
After the implementation of federalism, he has been elected as a member of the House of Representatives and the Provincial Assembly for the second time. The people’s representative who has just been elected and entered the parliament will fulfill the promise made to the voters before the election. Because of this, efforts will be made to implement the manifesto of the Satsin political party. But this year, the resource management for the mandatory obligations of the government has passed. Rather than bringing in new planning programs, it is more difficult to provide the budget for the old programs to the government.
This is the last year of implementation of the fifteenth five-year plan (financial year 2076/77-2080/81). The government should start the review of this periodical plan and the preparation of the 16th periodical plan this year. The paper work to be done for the new periodic plan should also be completed within this year. Social security and old age allowance became election slogans. But now its financial burden has reached a state where the state cannot bear it. It is said that it is a weapon to win elections and a tool of cheap popularity, sometimes in the name of increasing the amount and sometimes in the name of reducing the age.
Citizens who need special protection from the state need social security. But there is no clarity about its management, coordination, justice and transparency. According to the statistics of the National Identity Card and Registration Department, the number of active beneficiaries currently receiving social security allowance is 37 lakh 44 thousand five hundred people. About 13 percent of the budget goes to social security. It is important to think that many needs cannot be met with limited resources. In addition to the social security provided by the federal government, the state and local governments are also distributing voluntary social security allowances.
Former Finance Minister Dr. Yuvraj Khatiwada says that all political parties should have the same opinion and form a national consensus on social security. The issue of upgrading from underdeveloped countries by 2026 and achieving sustainable development goals by 2030 should also be kept at the center of the budget. The budget should look not only at the infrastructure development but also at the multifaceted aspects of human development. The National Resource Estimates Committee has set the budget ceiling. The National Resource Estimation Committee is preparing a budget for the next financial year within the limit of Rs 16 trillion 88 billion.
There is pressure on the government to prepare a practical budget, to be ruthless in cutting expenses and not to add new projects by adding unnecessary liabilities. Former Finance Minister Dr. Prakashchandra Lohani said that the current problem is not only economic but also politically, the problem is in the governance style, so there is a need to improve it. “There is a need to change the characters, governance methods and procedures of the country. Many studies have been conducted to reduce wasteful expenditure, the recommendations of such studies should be implemented”, said Lohani, “It is necessary to reduce general expenditure, raise the morale of the private sector and improve the character of the government at the same time.”
Former Finance Minister Dr. Gyanendra Bahadur Karki emphasized on bringing a realistic budget to instill hope in the sluggish economy. “A realistic budget should come in order to instill hope in all sectors. It is necessary to increase the morale of the private sector, which contributes 80 percent to building national capital”, Karki said, “Agriculture, energy and tourism should be prioritized in the budget. It is time to think about the safety of workers who have gone to work abroad. He said that the government should take the issue of many Nepali workers in foreign prisons seriously.
Former Finance Minister Surendra Pandey said that the government needs to exercise moderation in the use of public debt. He said that if the government cannot take loans at high cost and use them for capital formation, more problems will be created. Pandey told the government that he had given suggestions to Finance Minister Mahat that multi-year projects should not be given unnecessary resource assurance, projects should be implemented on the basis of priorities, and uniformity should be maintained in social security.
“The multi-year contract alone has secured resources equal to four billion. To reduce running expenses, procedures can be made in areas such as construction of buildings and purchase of vehicles. It should be ensured how much the state and local levels can spend on it”, said Pandey, “It is necessary to put social security in one basket. The employment sector can also be brought under one body. He said that now it is necessary to tighten the financial policy and loosen the monetary policy. Similarly, Pandey said that the tax system should be made technology-friendly and the involvement of outsiders in determining tax rates should be stopped.
“We have suggested to be careful not to manipulate the tax rates. By making the tax system software, it is not difficult to prioritize the issue of VAT going to the government account. It is necessary to increase the use of technology to make the tax system agile. Similarly, the system of subsidy should be implemented only in production.
Similarly, former Finance Minister Dr. Yuvraj Khatiwada said that since a big budget cannot be brought in now, instead of putting new plans and programs in the budget, the budget should be managed in such a way that the old programs can be managed. “There is no room to increase the size of the budget. The budget should come around the specified ceiling. A policy of not introducing new programs and completing incomplete programs should be adopted”, he said, “Frugality should be given first priority in all three levels of government. Multi-year contracts should not be guaranteed resources.”
He said that when the responsibility of social security is increasing but the resources are insufficient, all the parties should have the same opinion about it and gather a national consensus. Khatiwada said that he has also suggested to the government that there should be no deviation in the budget. “There should be no deviation in the budget. Tax proposals should not be above. Transfer money should be stopped in the first quarter”, Dr. Khatiwada said, “If the state cannot bear the burden, it can be taken from the private sector. Now the monetary policy can be relaxed. But fiscal policy should be tight.”
After getting suggestions from the former Finance Minister, Finance Minister Dr. Mahat said that he is trying to reduce the expenditure in case of low revenue compared to the target, allocate the budget only to the priority projects and increase the confidence of the private sector. In addition, he promised not to invest in projects that do not give returns and to give priority to infrastructure projects that can be completed on time and can be implemented immediately.
During the discussion, Finance Minister Dr. Mahat expressed that he is trying to prepare a budget to address the current complex situation and he hopes to get support from everyone for this. The National Planning Commission has set a limit (ceiling) of Rs 16 trillion 88 billion 40 crore for the next financial year’s budget. The budget ceiling for the next fiscal year, prepared with the medium-term expenditure structure, is Rs.
According to the commission, the budget limit has been estimated by analyzing the various challenges seen in the economy and their impact on the economic indicators. “A realistic estimate and projection of national resource mobilization has been made by analyzing the contraction seen in revenue mobilization until the half-year period of the current financial year, the decreasing trend of subsidies in foreign aid mobilization and the increase in the exchange rate, which may result in additional pressure on interest payments and the burden of internal debt payments,” the commission continued on Friday. It is mentioned in the press release.
The commission said that it has prepared and approved the guidelines and framework for budget formulation, 2079, including the three-year medium-term expenditure structure and the outline of the annual program for the financial year 2080/81. The commission said that the guidance and framework has been sent to all the constitutional bodies and ministries in the subject areas and the state government.
According to the medium-term expenditure structure, it is estimated that the government revenue will increase at the rate of 14 percent in the next three financial years. The size of the budget is also estimated based on the same estimate of revenue growth. “The total resources of the government of Nepal for the next financial year 2080/81 are Rs 16 trillion 88 billion 40 crores, for the financial year 2081/82 Rs 18 trillion 80 billion 20 crores and for the financial year 2082/83 Rs 20 trillion 88 billion 90 crores. The preliminary estimate is that it will be equal”, said the commission.
According to the commission, allocation efficiency has been taken into account while determining the budget limit for the next financial year. “The budget system’s predictability and allocation efficiency have been taken into consideration considering the situation where more budget is demanded from the relevant ministries or agencies but the allocation of the allocated budget is not appropriate. In the guidance, emphasis has been placed on the fact that it is appropriate to arrange the budget only for the programs and activities that will be spent or can be spent for the next financial year”, said the statement of the Commission.
Government expenditure and revenue collection are below target. The price increase has crossed the desired limit. The economic growth rate is only half of the target. The government reserve fund is in deficit. Not only the internal but also the external sector of the economy is under pressure. The condition of foreign exchange reserves is declining. The private sector, which is gradually weakening after the Covid-19 epidemic, has not yet been managed. Banks and financial institutions have problems with lack of liquidity and interest rates. Lately, problems have also been seen in the recovery of loans from banks and financial institutions. Similarly, there is a problem in the cooperative sector, which is the main pillar of the three-pillar economy.
Banks, financial institutions and the problems of the cooperative sector are affecting the market now. The borrowers are protesting that they cannot pay the principal interest of the loan. Today, Prime Minister Pushpa Kamal Dahal ‘Prachand’ discussed such problems in the financial sector with representatives of the Ministry of Finance, Nepal Rastra Bank, private sector and banks and financial institutions. After the discussion at the Prime Minister’s Office, the government has also assured the private sector of setting up a high-level commission to solve the current problems.
Government loan principal interest liability is increasing every year. According to the Public Debt Management Office, for the coming financial year 2080/8, Rs. Out of which Rs 1 trillion has been demanded only for the principal payment of the treasury bill. But in the current financial year, the government is not in a position to provide the budget as requested by the Debt Management Office since the government revenue is very low. According to the Public Debt Management Office, the government’s total public debt is equal to Rs. Out of which Rs 11 trillion two billion 51 crore is external debt and Rs 9 trillion 68 billion 1 crore is internal debt.