Himalayan News Service

Kathmandu, July 17:

Senior economists and former finance ministers termed the budget for fiscal year 2005-06 ‘ambitious’ and policy document ‘vague’. “The budget lacks proper focus to lead the economy,” they said, while speaking at a post-budget interaction organised by the Reporters’ Club in the capital today. Most of them also commented on the revenue and funding mechanism through foreign loans and grants citing ‘unrealistic’, due to present context of sluggish growth and uncertainty of foreign assistance. They also criticised over huge budget deficit and increased security expenses. However, they hailed the increment in the budgetary allocations for social sectors like education, health and agriculture sector. “The policy of inclusion of disadvantaged groups and dalits is also positive,” they said. The foremost important question lies in the government’s capability to implement the policies and programmes mentioned in the budget.

Finance Minister Madhukar Shumshere JB Rana yesterday unveiled an estimated budget of Rs 126.885 billion for the fiscal year 2005-06 through an ordinance. “The size of budget itself is big and revenue generation target of over Rs 81 billion is too ambitious. The size of development budget that finance minister has projected to be spent also seems unrealistic, provided the government’s spending capacity in the recent years,” said Dr Badri Prasad Shrestha, former finance minister. “The arithmetic of projection for the mobilisation of foreign

grant and loan worth over Rs 33 billion seems unrealistic as of today because of the donors indifference in the government’s plea in the recent days,” he added. “The budget document is a long and tedious essay, which lacks proper focus and direction,” commented Dr Ram Sharan Mahat, former finance minister. In terms of substance, the budget has covered a wide range of sectors but in essence they are ‘hollow’. Majority of the programmes lack resource backup that means they cannot be implemented,” Mahat added. Referring a big jump in allocation of capital expenditure has raised question over the government’s capability in spending on developmental activities, he argued, adding that of the total development budget only about nine billion rupees were spent last year.

Dr Bishwambher Pyakuryal, senior economist, said that increased allocation in social sector and agriculture is a positive note. He, however, raised question at an effective implementation and maximum utilisation of the allocated budget at rural area. “Without developing a proper mechanism, how can a government expect to spend the allocated budget in the rural areas,” he argued. Dr Narayan Khadka, former vice-chairman of National Planning Commission (NPC), said that the budget has not even properly evaluated current situation and has attempted to address issues raised by macroeconomic picture of Economic Survey 2004-05. Dr Dilli Raj Khanal, former NPC member, lambasted the budget and labelled it as an illusive and contradictory document, which lacks credibility in every managerial aspects. “In general budget is good, but it lacks clarity in action,” said Dr Mohan Man Sainju, vice-chairman of Poverty Alleviation Fund (PAF). Allocation of 37.10 per cent of the total development budget for the poverty alleviation programmes is commendable, he said.

Rajesh Kaji Shrestha, president of Nepal Chamber of Commerce (NCC) said that the budget has announced some positive steps in social and agriculture as well as exports and trading sectors. “However, the budget is silent on making conducive environment for business and economic activities in the country,” he added. Rajendra Khetan, vice-president of CNI, said that maintaining fiscal balance will be a major challenge for the government, since the country has already headed towards war economy. “The budget is a clear indication of war economy,” he added. Countering all the arguments, Dr Shankar Sharma, vice-chairman of NPC, however, said that this budget is a continuity of programmes and objectives set forth by the 10th Plan. “Revenue target is not ambitious and projection for foreign assistance has been set as per the donor’s country assistance strategy paper,” he argued.