Kathmandu, July 13

Will the government be able to collect taxes as per the provisions laid in the budget for the next fiscal year, which is beginning on Saturday? And will the government be able to raise domestic and foreign debt, as proposed through budget, to finance its expenses in case there is deficit of funds?

These questions are doing the rounds, as a group of parties, including the Nepali Congress and the CPN-Maoist Centre, today registered a no-confidence motion against Prime Minister KP Sharma Oli in the Parliament.

This move came on a day when three bills, considered crucial for the next fiscal’s budget implementation, were supposed to be ratified. With only three days remaining for the current fiscal year to end and many lawmakers showing lack of enthusiasm to endorse any new legal framework before PM Oli steps down, the fate of these three bills hangs in the balance.

Yet, lawmakers and senior government officials told The Himalayan Times that delay in ratification of these bills would not affect day-to-day businesses of the government in the coming days.

“Even if these bills are not ratified within the end of this fiscal year, or Friday, the government will still be able to collect taxes as per provisions laid in the new budget and raise foreign debt,” said former finance minister and senior Nepali Congress leader Ram Sharan Mahat. Similar views were expressed by senior finance ministry officials.

After presenting a budget of Rs 1,048.9 billion on May 28, the government had forwarded four bills — Appropriation Bill, Financial Bill, Bill to Raise Public Debt, and Loan, and Guarantee Bill — to Parliament to facilitate budget implementation.

Of these bills, only Appropriation Bill, which allows the government to implement budgetary programmes and utilise funds as per allocations made through the budget document, has been approved by the Parliament.

This means Financial Bill, Bill to Raise Public Debt, and Loan, and Guarantee Bill are yet to be approved.

Of these three bills, Financial Bill allows the government to collect taxes — the main source from which the government generates its income to finance programmes laid in the Appropriation Bill.

“But even if this bill is not approved now, the government will still be able to collect taxes as per the provisions laid in the new budget. This is because the Contemporary Tax Collection Act enables the government to introduce new tax rates by publishing a notice in Nepal Gazette,” a senior finance ministry official said.

The validity of notices published in the gazette lasts for six months, which means the government has the room to ratify the Financial Bill by then.

Similar is the case with the pending Loan and Guarantee Bill. This legal document allows the government to borrow funds from sources like the World Bank, the Asian Development Bank and other foreign financial institutions.

This bill has proposed that the government’s foreign debt ceiling be raised to Rs 700 billion from the existing Rs 500 billion.

But as of April 12, the country’s external debt stood at Rs 380.7 billion, show the data of the Financial Comptroller General Office.

“This means we still have room to borrow money from abroad using the previous ceiling,” said a finance ministry official. “This is a clear indication that delay in ratification of the Loan and Guarantee Bill will not immediately affect the

government’s external borrowings.”

This leaves the government with the issue of passage of Bill to Raise Public Debt, which allows the government to obtain loans from within the country. The government plans to raise Rs 111 billion in loans from the domestic market in the next fiscal year.

“But I don’t think it’s necessary to raise domestic debt in the next fiscal year, as we have treasury surplus (of Rs 197 billion as of Friday) due to the government’s inability to spend funds this year. So, considering the present situation, we would only be adding burden on the state by raising domestic debt in the next fiscal,” said Mahat.