Nepal | August 03, 2020

No hike in old age allowance, civil servants’ salary

Himalayan News Service
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Kathmandu, May 22

The Ministry of Finance (MoF), which is in the final stage of preparing the budget for fiscal year 2020-21, has clarified that social security allowances of old people and the salary of civil servants will not be raised and remain the same next year amid limited resources and new financial liabilities created by the COVID-19 pandemic.

While MoF officials said that the focus is being given to the health sector, COVID-19 responses, employment generation and infrastructure projects in the upcoming budget, austerity measures are being adopted with available resources by not allocating budget for low-priority projects, reducing unnecessary public expenses and not raising old-age allowances and salary of government staffs.

“As the government is facing huge additional financial liabilities due to the spread of the coronavirus, it is high time that the government adopts austerity measures and allocates budget for only priority projects and programmes,” said an official at MoF seeking anonymity. “While the health sector will be the primary focus of the budget,
resources will also be allocated for priority projects, especially those related to infrastructure as such projects will play a crucial role in generating additional employment opportunities,” the official informed.

Despite suggestions from experts and stakeholders to bring a limited sized budget this year concentrating on COVID-19 responses and the health sector amid resources crunch, the Finance Ministry is also expected to allocate budget for mega railway, waterway and airport projects as announced in the government’s policies and programmes, which means that the size of the budget for next year could be even larger than this year’s budget of Rs 1.32 trillion.

As per sources, the government is likely to allocate more than Rs 180 billion for physical infrastructure projects alone next fiscal year.

Moreover, a recent suggestion of the Finance Committee of the Parliament to the government to bring a budget of around Rs 1.7 trillion for next year has also encouraged the Finance Ministry to further expand the budget size for fiscal 2020-21.

MoF plans to boost internal borrowing, inland revenue collection and foreign aid for next fiscal year. The government plans to seek foreign aid worth almost Rs 400 billion and internal borrowing worth almost Rs 200 billion to balance the expenditure and source for the budget for next year.

However, the government is lately being criticised for trying to largely rely on foreign aid in the budget without official aid commitments from bilateral and multilateral donor agencies.

Economist Biswo Poudel said that there is no logic in bringing a large budget without confirmation of financial sources to implement it.

“It is clear that the government will once again bring a large-size budget for next year giving priority to different unfeasible projects if you take into consideration the recently announced policies and programmes,” he added.

A version of this article appears in e-paper on May 23, 2020, of The Himalayan Times.

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