Nepal | April 05, 2020

NPC fixes budget ceiling at Rs 841 bn

Rupak D Sharma

Cap was revised considering the damage caused by quakes

KATHMANDU: The government’s spending in the next fiscal year is expected to jump by around Rs 223 billion, or 36 per cent, compared to this fiscal, as the National Planning Commission, the apex body that frames the country’s development plans, today revised the budget ceiling for 2015-16 to around Rs 841 billion.

Now, the Ministry of Finance will have to draw up spending plan for next fiscal, beginning July 17, by remaining within this limit — albeit NPC’s recommendation is not always strictly followed by the MoF while preparing the budget.

The 2015-16 budget cap was created based on revenue collection target of around Rs 480 billion, foreign aid mobilisation target of around Rs 225 billion and internal borrowing of around Rs 85 billion, a reliable government source told The Himalayan Times.

Also, around Rs 51 billion is expected to be mobilised through other internal sources, like carryover from this fiscal’s budget and principal repayment made by state-owned enterprises, among others. “Based on these figures, the NPC and the MoF will now fix next fiscal’s targets for recurrent expenditure, capital expenditure and financing provisions,” the source said.

The budget ceiling fixed today is around Rs 106 billion more than the previous one. Earlier, the budget ceiling for 2015-16 was fixed at Rs 734.54 billion. However, the cap was revised upwards today considering the damage caused by the devastating earthquake of April 25 and subsequent aftershocks, and the need to spend more on reconstruction.

Since the quake struck the country, groundwork to revise the budget ceiling was being done by the Resource Committee led by NPC Vice Chairman Govind Raj Pokharel. The committee originally fixes the cap prior to handing it over to the NPC Secretariat to circulate it among ministries, including the MoF.

In this regard, the committee, which also comprises Nepal Rastra Bank governor and finance secretary, had also met yesterday but could not finalise the ceiling because of lack of data on revenue collection target for next fiscal, sources said. Before the earthquake ravaged parts of the country, the government had set revenue collection target of Rs 586.70 billion for next fiscal.

But that goal is almost impossible to achieve, as most of the sectors, ranging from tourism, housing, insurance and banking to trade and manufacturing are expected to witness slow growth, or even negative growth, because of domino effect of the quake.
“We have now settled on Rs 480 billion and hope we can achieve it next year,” the source said.

However, the composition of the government’s revenue of the next fiscal is not yet known. It is also not known whether the government will introduce a new tax next year to mobilise resources for reconstruction and recovery as recommended by the High Level Tax System Review Commission.  The government’s budget for this fiscal stood at Rs 618.10 billion. Of this, Rs 398.95 billion was earmarked for recurrent expenditure, like salary payment of civil servants, grants to local bodies and interest payment. Another Rs 116.75 billion were allocated for capital expenditure, like building physical infrastructure projects, and Rs 102.39 billion was appropriated for financing provisions, like investment in state-owned enterprises and principal repayment.

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