‘Budget sets out to satisfy all sectors’

Kathmandu, July 17:

At a time when the question of longevity of the current seven party alliance (SPA) government is being raised, economists, former finance ministers and business sector people have termed the budget for fiscal year 2006-07 as an effort to ‘satisfy all’.

Resources have been scattered on different sectors instead of using them in a consolidated manner, despite the economy awaiting an effective revival package.

Dr Ram Sharan Mahat, finance minister, admitted the fact that resources have been allocated so that people can boost economic activities in rural areas. The budget has tried to encourage economic activities in the underprivileged sections of society.

Doubling the budget for village development committees is mainly aimed at boosting rural economy, said Dr Mahat, speaking at a post-budget interaction programme jointly organised by the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and Nepal Economic and Media Society (NECOMIS).

At the interaction programme attended by over 200 experts including former finance ministers, former vice-chairmen of the National Planning Commission (NPC), senior economists and business sector experts, Dr Mahat urged all concerned to help the government in the recovery of defaulted loans.

He categorically said that industry and business activities should run without fear of violence. The forthcoming election to Constituent Assembly would decide the fate of Nepali people, said Dr Mahat. He urged that people should have a right to property, to political freedom and an environment to compete freely.

Former finance minister Dr Badri Prasad Shrestha objected to the revenue collection target of Rs 85 billion for fiscal year 2006-07. He pointed out to achieve Rs 85 billion revenue, a 19 per cent revenue growth needs to be achieved.

Foreign aid worth Rs 40 billion would be also be difficult to garner considering the existing difficult situation, he said.

Private sector alone contributes about 80 per cent to the national economy and government’s contribution is only about 20 per cent. This clearly shows the need to boost the private sector urgently, he said. The governor of Nepal Rastra Bank (NRB), Bijay Nath Bhattarai stressed on repayment of banks’ loans to reduce non-performing assets (NPAs) of the banking sector that stands at 18 per cent amounting to Rs 29 billion as non-performing loans. It should be recovered at any cost, Bhattarai said.

Prof Bishwambher Pyakuryal, president of Nepal Economic Association (NEA) suggested the government to effectively control expenditures in order to keep inflation in check. There should be certain mechanisms to spend the budget and spend resources effectively with the involvement of concerned stakeholders, said Prof Pyakuryal.

Dr Shankar Sharma, former vice chairman of National Planning Commission (NPC), said revenue target can be achieved.

However, the target of foreign loans and grants, would be difficult to meet, he said. To implement budget effectively, monitoring is crucial, said Dr Sharma.

Prof Madan K Dahal, former head of Tribhuvan University, Department of Economics expressed his ire on the hike of mere 10 per cent allowance for civil servants. He complained of a lack of a mechanism to protect industrial investment.

Nepal Communist Party (Maoist) leader Agni Sapkota said that the current government has failed to incorporate expectations of people. Sapkota stressed on a self-reliant economy. He was of the opinion of adopting a freer economic policy (FEP).

Chandi Raj Dhakal, president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) expressed doubts over the effective implementation of the budget for boosting the business sector.

“Budget is unlikely to boost local and foreign investment. Therefore, common programmes of government, business sector and the Maoists should be implemented at the local level,” he said.