KATHMANDU, July 6: It is still uncertain whether the government will announce a full-fledged budget, but if it did so, officials said the size of the upcoming budget for 2012/13 will be bigger than the ceiling of Rs 429.60 billion.
“The picture is still unclear, but developments so far indicate the size will exceed the ceiling by at least Rs 5 billion,” a reliable source engaged in the budget formulation process told Republica, requesting anonymity. He admitted that such a move would contravene with the basic fiscal norms that the government has been following so far.
When the National Planning Commission set the ceiling for 2012/13 budget in consultation with the Ministry of Finance (MoF), it had ascertained the maximum resources that the government can mobilize from all available sources at Rs 429.60 billion. “Even that figure was calculated taking ambitious targets (of revenue and foreign aid),” said the source.
But MoF now says it will not be able to adhere to the ceiling. The officials attributed emergence of such a situation to the lack of incorporation of election cost while setting the ceiling.
After Prime Minister Baburam Bhattarai on May 27 announced a fresh Constituent Assembly for November 22, the Election Commission a few weeks ago had informed MoF that it would need Rs 10 billion for holding the elections.
“On the other hand, the National Planning Commission (NPC) had already endorsed development projects and programs under the set ceiling. This has left us with little space to accommodate EC´s demand from resources we had identified earlier,” said the source.
In such a situation, MoF has lately knocked on the doors of the donor communities, exploring options for additional pledges. According to sources, the initial reaction of donors has been "not so encouraging" mainly as they were concerned over the widening differences between the government and the opposition parties.
“Some even expressed skepticism over the possibility of holding elections in such political imbroglio and the possible hostility that may arise between various alliances for and against identity-based federalism,” said the source.
Officials preferred to maintain silence over the chances of mobilizing the whole election cost above the ceiling. “The picture so far is: if the donors responded generously, the new budget would exceed the ceiling by Rs 10 billion,” said the source.
Even if the donors did not open their purses so generously, officials are hopeful of mobilizing about half of the election cost from them. “In such a situation, we will need to manage the remaining fund by cutting allocations worked out for large ministries and also allocation set aside under the heading of ´investment´,” said the source.
NPC Vice-chairman Deependra Bahadur Kshetry admitted that the budget for 2012/13 would exceed the ceiling. However, he did not mention the extent by which it would be larger than the ceiling.
“The inflated budget is pretty imminent because of additional expenses like election cost and some Rs 3 billion that the government needs to pay as the second installment to the retired Maoist combatants,” said Kshetry.
Speaking at a function on Thursday, he said the government also requires additional funds because it was announcing new programs like 100-day job guarantee to make the people feel the change.
Economists and leaders from opposition parties, meanwhile, continued to oppose the government´s move to announce a full-fledged budget. Stating that the caretaker government has no right to announce a full-fledged budget, they urged the government to announce budget sized at just one-third of this fiscal year´s actual expenditure.