Nepal | July 13, 2020

EDITORIAL: Misleading figures

The Himalayan Times
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The Finance Ministry must make a public statement as to how erroneous figures on revenue collection came to the fore

When Finance Minister Yubaraj Khatiwada took office last year, he painted a bleak picture of the country’s economy. Presenting a “white paper” on March 30 last year, Khatiwada had stated that majority of Nepal’s economic and development indicators were “negative and economic activities were increasingly shrinking due to lack of a favourable business environment.” He had blamed the previous governments for the gloomy economic scenario. One year down the road, the Finance Minister and the Prime Minister resorted to braggadocio that the national economy was on the right track. When the PM addressed the House of Representatives last week, he claimed that his administration had addressed most of the economic issues resulting in sound economic growth. But the economic indicators the PM presented in the House have turned out to be misleading. The government seems to have made a deliberate attempt to inflate the country’s economy, based on the figures maintained by the Financial Comptroller General Office (FCGO), the main agency responsible for the government’s treasury operation.

The FCGO had earlier stated that the government had generated revenue worth Rs 520 billion during the first half of this fiscal. The figure is Rs 100 billion more than the government’s revenue collection target. Now, the FCGO has admitted to “inadvertently producing inflated figures” because of double counting of funds transferred to the “divisible fund”. A portion of VAT and inland excise duty, which are shared by the federal government, provinces and local levels, are parked in the divisible fund. The FCGO’s figure is 21 per cent more than the government’s revenue target. However, Nepal Rastra Bank has now corrected the mistake, saying the government actually generated Rs 414.3 billion in revenue in the first six months of the fiscal year. It means the government missed the revenue collection target by 3.4 per cent. The revenue collection went down due to a slowdown in the collection of revenue at the customs offices during the period. The FCGO system should have deducted the amount kept in the divisible fund from the federal government’s gross revenue. But the deduction was not made. It means that the money kept in the divisible fund was counted twice.

The FCGO data sheets on revenue show the money parked in the divisible fund seems to have surpassed the federal government’s revenue. What it shows is that the FCGO had presented wrong statistics from the very beginning of this fiscal. The wrong figure presented by the FCGO has also misled the International Monetary Fund, which, based on the FCGO data, had projected that Nepal could have a fiscal surplus in the current fiscal if the government continues collecting revenue at the same ratio. Presenting misleading figures about the country’s financial health by none other than a competent authority like the FCGO is a serious issue. How could the FCGO have presented false data while updating the government’s income and expenditure on a daily basis?

In this case, the Finance Ministry must issue a public statement as to how the erroneous figures came to the fore. The government might not be able to collect the targeted revenue due to various reasons. But we cannot expect the government to publish misleading figures.

Prevention is better

The lawmakers have a point when they say kidney transplant should be the priority over free dialysis service as it will reduce the burden of healthcare expenses on the state. The government has allocated funds to provide free dialysis service to Nepalis in select hospitals, but the ever-growing number of such patients puts a strain on the available budget. Currently, there are 4,500 patients undergoing dialysis in 52 listed hospitals across the country and hundreds more wait for the service every day.

Dialysis is not a permanent solution for kidney failure. Dialysis involves at least two to three visits to a hospital with a facility every week, and is painful and time-consuming. A kidney transplant may seem like a better option, but the cost is exorbitant even when a willing kidney donor has been found. A kidney transplant is also not the end to the malaise. The treatment after it in terms of medicines to be taken, regular follow-ups and constant care that must be given to the patient involves heavy expenses. So the government’s attention should be directed towards healthy living habits that prevent kidney failure.


A version of this article appears in print on January 22, 2019 of The Himalayan Times.

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