Kathmandu, March 12

The Ministry of Finance (MoF) is all set to launch the ‘white paper’ on country’s current economic situation so that the budget of current fiscal can be realigned to the priority areas and projects that are making encouraging progress.

Scheduled to be unveiled by Finance Minister Yubaraj Khatiwada in the next few days, the white paper would also point at specific areas requiring major intervention, progress in execution of projects, and necessary reforms in revenue sector.

Earlier, Finance Minister Khatiwada had spoken about discontinuing the trend of ‘resource guarantee’ for projects, as had been done during the tenure of past governments.

Finance Minister Khatiwada had worked as an architect of the previous white paper issued by then finance minister Bishnu Paudel on November 24, 2015. Issuing at a time when the country was reeling under acute shortage of essential items due to supply disruptions, the white paper had enabled the government to realign the budgetary programmes to streamline supplies.

It is major challenge for Finance Minister Khatiwada to generate the resources for grant transfers to the lower layers of administration and smoothly run the federal government.

In the current fiscal, the federal government’s committed liability — including the necessary expenses like salaries, pensions, social security allowances, operation of foreign missions, resources allocated to national pride projects, among others — is almost 60 per cent of the total budget.

Starting next fiscal, almost around 30 per cent of the value added tax (VAT) and excise duty will be shared with the lower layers of administration under the revenue sharing mechanism.

Against this backdrop, Finance Minister Khatiwada will be presenting budget for the next fiscal. But prior to entering the budget formulation process, the finance minister will unveil the white paper so that he can introduce some austerity measures, realign the budgetary programmes towards priority areas, namely energy and transport and gauge the looming challenges in the revenue front.

As per finance ministry sources, Khatiwada would mostly focus on accelerating execution of energy, transport and reconstruction projects.

The previously issued white paper of the CPN-UML government had also envisioned ensuring energy security in the aftermath of fuel crisis. However, the issues identified as focus areas were later dropped.

As per sources, the white paper will also discuss bringing in capital from foreign banks to end the perennial challenge of loanable fund crisis in Nepali banks. Finance minister has also repeatedly said that the resources available in the country are insufficient to spur economic growth and move forward towards higher growth trajectory.

Khatiwada, who has a background of technocrat, will be prescribing the best possible ways to diagnose the structural constraints of the economy. And the white paper that finance ministry is going to unveil in the near future will be a guiding document for the policy and programmes of the KP Sharma Oli led government for the next fiscal’s budget.