Nepal | July 15, 2020

FinMin presenting FY 2020-21 budget today

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Finance Minister Yubaraj Khatiwada is presenting the fiscal budget of 2020-21 at the joint meeting of House of Representatives and the National Assembly on Thursday amidst everyone’s curiosity on how the government will address the pain inflicted by the COV- ID-19 in almost every sector of the economy.

As the coronavirus continues to spread rapidly and the pandemic is expected to further deepen the current crisis in the coming days, experts, business communities, general public and other stakeholders of the economy are eagerly waiting to see what measures the government will introduce through the budget to lift the health sector and the overall economy from near devastation caused by the COVID-19 contagion.

Taking COVID-19 pandemic into account, experts have been saying that the upcoming budget should principally dwell on scaling up the health infrastructure and resources to contain further spread of the virus, reviving the economy from the shocks of coronavirus and generating employment opportunities for those who have lost their jobs due to this crisis. They have been suggesting the government not to prioritise new infeasible projects and other slow progressing projects in the budget amid resource constraints, indicating that the budget for next fiscal year should be realistic — both in terms of its size and projects and programmes being incorporated.

However, if government’s policies and programmes is anything to go by, the budget size for next fiscal year is expected to exceed that of the ongoing fiscal year, which is Rs 1.53 trillion. Economic experts have been saying that if the government’s policies and programmes are to be fully implemented, even a budget of Rs two trillion will be insufficient.

The government has already hinted through its policies and programmes for the upcoming fiscal year that the budget will also give priority to different populist programmes and projects. Moreover, Minister Khatiwada stressed while presenting the Economic Survey of 2019-20 on Tuesday that different economic indicators of the country were positive until the virus began spreading in the country. In case he prepared the government’s programmes and policies for next year based on the economic indicators presented in the Economic Survey and is to announce the budget based on the same programmes and policies, there is more cause to worry as the economic survey report is based on statistics of first eight months of the year, while the scenario today is much different due to the spread of COVID-19.

Economist Bishwo Poudel opined that the reservations against the government’s policies and programmes were valid as it was presented as if the government has surplus financial resources and it also missed out on concrete relief and other measures to help the country revive from the COVID-19 shock.

Experts have also suggested the finance minister to exercise austerity in recurrent expenditure, not overestimate foreign grant and loan utilisation capacity of the government and allocate more funds for health and employment sector. Along with this, they have also said that concrete packages should be introduced in the budget to boost the morale of the business community, which has been hit hard by the pandemic.

“Given limited resources, the government should be strict in recurrent expenditure and focus on upscaling the health sector and the reviving the economy,” added Poudel.

The country’s business community, which is anxiously awaiting the budget details, believes that the future of businesses in the country is in the hand of the government and policies that it plans to introduce through the budget for next fiscal year.

“The government, including the finance minister, is well aware of the crises that Nepali businesses are going through today and we have repeatedly suggested the measures that it should introduce through the budget to help enterprises revive. Thus, we are hoping the budget for next fiscal will finally provide some relief to the private sector,” said Bhawani Rana, president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI).

Businesses in the country have been demanding special relief packages through the budget that will address their current and future needs.

Among others, the business community has been seeking special loan facility from the government at minimal interest rate and extension of loan repayment and tax payment period. Similarly, they have also been asking the government to reduce tax rates — VAT, corporate income tax, excise duty and import tax — for a certain period.

Meanwhile, officials at the Ministry of Finance were reluctant to comment on the budget. “The budget will revolve around COVID-19, address gaps witnessed in the health sector and revitalise the economy while will also prioritise various ongoing infrastructure projects and focus on achieving different development goals,” said an official at the ministry.

A version of this article appears in e-paper on May 28, 2020, of The Himalayan Times.

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