Kathmandu, July 12, 2007

Skeptics suggest that this is a ‘make-belief’ budget, prepared for its own sake, by a government that is counting its days against the onset of Constituent Assembly elections.

Most feel that finance minister Dr Ram Sharan Mahat has cobbled together a budget that can keep not only the fragile political support base of the government afloat, but keep the industry and the sundry public off his heels too.

This miracle of sorts is to be achieved by a budget worth Rs 168.99 billion, a whopping 28.2 per cent rise from last year’s revised budget expenditure of Rs 132.85 billion. Dr Prakash Chandra Lohani, former finance minister, said, “It is a nice ‘document’ which people will forget very soon.

An annual ritual has been completed and nothing is new.” The uppermost question on critics’ mind, however, is how on earth is this massive bill is going to be met. The finance minister will have us believe that Rs 99.60 billion will be borne from current sources of revenue, which is in contrast to Rs 86.13 billion during the last year. Rs 27.46 billion is to come from foreign grants while and Rs 17.36 billion is to come from foreign loans — a total of Rs 44.82 billion in foreign aid.

These figures are set against last year’s Rs 23.72 billion in foreign grants and Rs 16.09 in foreign loans — a total of Rs 39.81. Even after mobilising additional resources of Rs 4.61 billion, a net budget deficit of Rs 20.5 billion will be financed from domestic borrowings.

Even if it is granted that peace and common sense will prevail and Mahat’s revenue target will be met and domestic market will be strong enough to provide the Rs 20.5 billion needed to get across the budget deficit, the big question is over the foreign aid component.

No money for palace?

For the first time in its 26-year-long history, the budget has not earmarked a single penny for the king and the royal family members in the Rs 168.99 billion proposed budget for the fiscal year 2007-08.

The finance minister had reduced the palace budget to Rs 210m in the last fiscal year, which was Rs 740m in 2005-06. Commenting on the absence of the topic ‘royal palace’ in the budget, Dev Gurung, minister for local development, said he had ‘heard’ that the government is allocating Rs 25 million for the royals this year.

Gurung, who also looks after the finance department of the Maoists, suspected that the government might have allocated a budget for the palace under different headings, including Prime Minister’s Office and ‘miscellaneous’ of the ministry of finance. He also said the budget for the security of the royal palace has been allotted through security and maintenance.

Maintenance of the palace and budget for employees could have been incorporated within the budget for the ministry of general administration, he added.