Nepal | August 05, 2020

Province 4 presents most realistic budget

Himalayan News Service
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Kathmandu, June 16

Provincial governments presented the budget for next fiscal year 2018-19 in their respective provincial assemblies on Friday. A majority of them, except for Province 4, have presented budgets of an inflated size.

The budget presented by Province 4 is moderate in size and 66 per cent of the total budget has been allocated for capital expenses. Province 4 has presented a budget of Rs 24.02 billion, the smallest in size among all budgets presented by the provinces.

Province 4 will receive Rs 21.33 billion under fiscal transfer (conditional, equalisation, matching and special grants) and revenue-sharing from the federal government. Apart from that, the provincial government will raise Rs 800 million through internal debt and Rs 600 million from the reserves of the current fiscal. Province 4 will collect only Rs 1.4 billion through internal revenue to finance the budget for next fiscal year. It means taxpayers of Province 4 have relatively less burden of taxes levied by the provincial government.

Karnali province has allocated the highest amount for capital expenses, at Rs 21.24 billion or 75 per cent of its total budget. The federal government has allocated Rs 9.13 billion as equalisation grant to Karnali, which is the highest among all the provinces due to its remoteness where cost of development is higher compared to other provinces. The budget of Karnali province is, however, underfinanced.

Among all the provinces, Province 1 has presented the largest budget of Rs 35.93 billion.

Province 3 also has a moderate budget based on the sources of financing. It has presented a budget worth Rs 35.6 billion. The province will receive around Rs 27 billion from fiscal transfer and revenue-sharing.

Meanwhile, Province 7 has allotted more funds under the recurrent expenditure heading, which is 55.4 per cent of the total budget. Among all the provincial budgets, recurrent expenses have surpassed the capital expenses only in Province 7.

The budgets presented by the provinces are aligned with the national priorities. The federal government has expected the capital expenses to hover around Rs 6.5 billion from the consolidated budget of provinces and local assemblies.

From next fiscal, the federal government will transfer 40 per cent of the conditional grant in the beginning of the fiscal year as first tranche and the remaining three tranches will be transferred based on the performance of expenses in the provinces. Similarly, equalisation grant will be transferred in each quarter in four instalments.

A version of this article appears in print on June 17, 2018 of The Himalayan Times.

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