Govt expects economy to expand by over 2pc
Kathmandu, February 18
There has been resurgence in the government’s confidence with the lifting of over four-month-long border blockade, as it today said prospects of the country’s economy expanding by more than two per cent were high this fiscal year.
The government had initially set economic growth target of six per cent for this fiscal year. But as protests in the Tarai and blockade on Nepal-India border points created shortage of petroleum products, raw materials and other essentials, the government had revised the annual growth target to two per cent.
However, during today’s mid-term review of the budget, Finance Minister Bishnu Prasad Paudel said chances of annual economic growth hitting more than two per cent were high — although a statement released by the Ministry of Finance (MoF) only says ‘special efforts would be made to achieve GDP growth rate of over two per cent’.
The minister’s optimism largely stems from gradual normalisation of the supply situation.
“Also, the National Reconstruction Authority has officially come into operation, which will accelerate the pace of implementing post-earthquake reconstruction projects,” the minister said. “Gradually, capital expenditure will also rise (with easy availability of raw and construction materials), which will crowd in private investment. All this will help push up the growth rate.”
Although Minister Paudel appeared quite confident about economic growth prospects, achieving the goal may not be easy, considering presence of red tape and lethargic bureaucratic system, which fails to make delivery on time.
It has long been said that civil servants should be held accountable for failing to implement programmes announced through budget. But no one seems to be serious about this matter, while infrastructure gap is widening in the country.
To address this problem, the previous government had floated the idea of introducing a Bill on Budget Management and Fiscal Accountability and had even started drafting it, but the process has been stalled.
Today, Minister Paudel stressed on the need to introduce the law, but it is yet to be seen how far he can take
Unless serious efforts are made in this regard, most of the plans announced today by Minister Paudel will not materialise because inefficiency in the bureaucratic system, which has resulted in low fund absorptive capacity, has always worked as a stumbling block for project implementation and higher capital spending.
To expedite capital spending, Minister Paudel said, the government has already started realigning budgetary programmes. He, however, did not elaborate on the issue and did not take any question from journalists during today’s event.
He also said budget will be reallocated from one heading to the other to enable transfer of budget from defunct programmes and projects to those that are functional and in need of money. In this regard, the MoF has already directed all ministries to surrender budget that is not likely to be spent this fiscal year.
“To facilitate this process, a high-level committee established to monitor and give directions to infrastructure projects has started working,” Minister Paudel said.
With these efforts, the MoF intends to spend almost 77 per cent, or Rs 160.65 billion, of the annual capital budget of Rs 208.88 billion by the end of this fiscal year.
Overall budget utilisation is expected to stand at 85.66 per cent by the end of this fiscal, the finance minister said.
The government had earmarked total budget of Rs 819.47 billion for this fiscal. Of this amount, only Rs 179.77 billion, or 21.94 per cent, was used in the first six months of current fiscal year through mid-January.
The government’s capital expenditure, in the six-month period, stood at Rs 15 billion, or seven per cent of the total