Nepal | July 21, 2019

Budget to take on federal structure

Pawan Timilsina
Ministry of Finance

Photo: Skanda Gautam/ THT

Before proper implementation of budget, the government will have to prepare a conducive environment for economic development

Kathmandu

The budget of fiscal year 2017/18 is highly awaited anticipating the government’s next move in terms of economically restructuring the country. Meanwhile, the local level elections were successfully conducted after 20 long years of hiatus. However, for proper implementation of the budget, the government has to work towards just allocation of funds, prior arrangement for integration of available resources and look at introducing new ways for proper utilisation of funds.

Budget Allocation

According to the Ministry of Finance (MoF), the government would bring a budget in accordance with the ceiling fixed by the National Planning Commission (NPC) as mandated by the Constitution on May 29. NPC, the apex planning body of the country, had raised the budget ceiling for fiscal 2017/18 by 10.21 per cent as compared to the current fiscal which stood at Rs 1,156.04 billion in the first week of February.

Spokesperson of MoF, Ramsharan Pudasaini, said, “The budget allocated is not enough. It would only cover the daily administrative cost and supportive elements of the establishment.”

According to the government’s plans and programme, the new budget would give high priority to the upcoming provincial and parliamentary elections, national pride projects and projects of national priority, reconstruction among other sectors.

Challenges

According to MoF, the government has spent only 22.54 per cent of the total budget of Rs 1,048.92 billion under current fiscal year (2016/2017). If the past budgets are to be taken into consideration then the fate of this budget too does not look promising.

Former Secretary of MoF and Economist, Rameshwor Khanal, claimed that the weak performance in budget implementation is due to slow capital expenditure. He said, “The upcoming budget would be difficult to manage for the government. The management of resources to restructure or create a new structure of administration before the local representatives are elected must be given priority. The government has to a lot of work to do to establish proper administration in order to integrate civil workers.” He further added that the government has to think over the plans and policies before taking decisions.

Shanta Raj Subedi Secretary of MoF

“The government is committed to bringing investment and business-friendly budget in a bid to sustain economic growth of the country”

                          Shanta Raj Subedi
                            Secretary of MoF

Finance Secretary Shanta Raj Subedi said that the major challenges faced by the country in the past, and now, has been to sustain economic growth. “The government is committed to bringing investment and business-friendly budget in a bid to sustain economic growth of the country,” Subedi said.

According to MoF, the capital expenditure of the government this year was approximately 3.8 per cent of the Gross Domestic Product (GDP), while capital expenditure in the last one decade had not crossed two per cent of the national GDP. “As the structure of national GDP today has increased to $26 billion from $22.49 billion in the previous year, capital expenditure, although is seen to be less is, in fact, increasing of late,” he added.

Subedi added that low-spending capacity of the National Reconstruction Authority (NRA) affected the entire capital expenditure of the government this fiscal, as the authority had been allocated a huge chunk of the budget for its reformation.

Budget to institutionalise local government

President Bidya Devi Bhandari said on May 25, 2017 during the presentation of the government’s annual policy and programme for the next fiscal year 2017/18 at the Parliament, said, “The Constitution would be fully implemented only after the election in all three levels — local, provincial and federal.”

Under the new Constitution, local bodies have substantial amount of clout — they will draft laws, collect certain taxes and even have some judicial powers.

Tulasi Prasad Gautam, Spokesperson of NPC said, “It is necessary to assemble cost for the construction of local level administration, management of government officers and public services as soon as possible. On the other hand, there are many national pride and big projects under construction. That is why we have not put forward any new projects.”

Gautam said that in order to make the local administration ready to work for the next fiscal year, the government has formed a committee to work on preparing local level government bodies which entails integration of civil workers.

“If the next elections conclude successfully, it will help to implement the Constitution and create ownership in the general public and rebuild trust in the country’s choice of system of political representation,” he further added.

Pudasaini also said, “The coming budget will not comprise new programmes as it has to focus on institutionalisation of the local level government mandated by the new Constitution. Our first priority is to establish local administrations and integrate manpower. We also have to utilise available resources of the central administration for the benefit of the locals within the country.”

According to the policies and programmes of the government as per the budget, implementation of the Constitution and federalism including amendment to existing laws and formation of new ones is the government’s priority. A Cabinet meeting held on May 21 passed such policies and programmes. They also include federal and province level elections and expediting national pride projects. It also encompasses topics including sustainable economic growth, self-employment and the ‘Brighter Nepal’ campaign, among others.

Ramsharan Pudasaini Spokesperson of MoF

“The coming budget will not comprise new programmes as it has to focus on institutionalisation of the local level government mandated by the new Constitution.”

                                    Ramsharan Pudasaini
                                      Spokesperson of MoF

Although the government has not presented new plans and programmes for the coming fiscal year, it has prioritised to set up policy level provisions for a new structure the country will find itself in after the completion of local level elections.

Continuity to previous ongoing programmes

Deputy Prime Minister and Minister for Finance Krishna Bahadur Mahara reiterated that the new budget for the fiscal year 2017/18 would not incorporate any new programme and would only give continuity to the existing government programmes. According to him, the government will not be able to present the complete budget keeping in mind the recently concluded local level elections on May 14 and the second phase scheduled for June 14.

Election Commission stated in its decisions on May 17 that the election code of conduct and policy decisions related to it will be enforced on the presentation of the budget (for the coming fiscal year 2017/18) by the government. The full budget is expected to be presented on July. Completion of under-construction hydropower has also been kept in the priority list according to the policy and programme. Economic growth rate of next fiscal year is expected to increase up to seven per cent given the investment-friendly environment and corruption control in the hydropower sector. Likewise, according to the government, the under-construction projects would also be completed soon.

Local governance for post-quake reconstruction

For the coming fiscal year, the government has planned to involve local level representatives to speed up post-quake reconstruction. The government would speed up post-quake reconstruction efforts and increase the capacity of NRA. The government would also provide subsidised loans to quake survivors. Government offices, schools and buildings of archaeological importance would also be given priority.


A version of this article appears in print on May 28, 2017 of The Himalayan Times.


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