Coming budget to be realistic: Finance Minister
Himalayan News Service
Kathmandu, June 5:
Madhukar Shumshere JB Rana, finance minister, said that the coming budget will be realistic and based on revenue mobilisation and expenditures as well as economic growth target. At a pre-budget interaction organised by Nepal Chamber of Commerce (NCC) today, Rana said that the coming budget will focus on fiscal stability while maintaining at least a minimum economic growth rate. “More emphasis will be given on indirect tax rather than direct taxes,”
he said, adding that the government has no immediate plan to hike value added tax (VAT) rate. He, however, admitted that there is a need to increase tax net instead of tax rate in order to meet increased expenditures. Responding to the queries, Rana said that procedural implications will be solved through negotiation and consultation with the concerned authorities. “Since the budget is a policy document, it may not be able to reflect all the issues. Although we can sort out the problems through dialogue and negotiations.” Bhanu Prasad Acharya, finance secretary, hinted that the budget would focus at maintaining fiscal stability and cutting down unnecessary overhead expenses. “Budgetary allocation will be based on prioritisation of projects giving utmost focus on expenditure management.” He also said the government is serious about reducing recurrent expenditure and increasing the capital expenditure. “Tax net has to be increased streamlining the tax administration,” Acharya said.
Speaking on the occasion, Professor Dr Bishwambher Pyakuryal, president of Nepal Economic Association (NEA) suggested to increase development expenditures at leastto maintain minimum rate of growth. “Adequate budget allocation is necessary for the prioritised projects,
which will maintain minimum rate of growth,” Pyakuryal said. “Investment increment is
inevitable as prevailing environment is not sound. Considering difficult situation, the government should adopt expansionary fiscal policy,” he suggested, “To boost revenue mobilisation, reforms in foreign aid policy, security and other mechanisms are short-term needs.” Prof Dr Puskar Bajracharya pointed out the need to boost trade, which will help to solve unemployment problem as well as play a catalytic role in poverty reduction in long-term. “To increase volume of trade, exports need to be boosted. Once exports starts increasing, it will help to bridge huge trade deficit as well as generate employment,” Bajracharya said.
Referring present whopping decline in exports, he suggested that the export sector is yet to get due attention in terms of promotion and incentives. “The government should take initiative in association of private sector for the enhancement of competitive edge of those products in which Nepal has a comparative advantage, which will help increase the exports,” he said. Besides traditional and pocket export markets, Nepal should explore new markets as well as diversify product base, he suggested. Rajesh Kaji Shrestha, president of NCC stressed the need of consistency on government policies, which otherwise create instability. “Changes in budgetary policies through ordinances have caused confusions,” he said. He also suggested that the forthcoming budget should bring strong measures to curb illegal trade, which is
estimated to be over Rs 30 billion a year. He strongly urged not to increase tax rate, particularly VAT rate. Him Bahadur Rawal, chief of revenue committee at NCC presented detailed recommendations for the forthcoming budget.