Says it failed to create investment-friendly environment
KATHMANDU, Aug 5: The Ministry of Finance on Sunday made public its report card for the last fiscal year, praising itself for beating the revenue collection target, expanding the size of the foreign exchange reserve and adding more people and firms to the tax net, while identifying inability to create investment-friendly climate, fully spend capital budget and inculcate the culture of issuing bills at the grassroots level as huge challenges facing the government.
In the one year period through July 15, the finance ministry collected Rs 244.14 billion in revenue, beating the target of Rs 241.77 billion set for the year. In the period, the government was also able to expand foreign currency reserve to Rs 427.01 billion, marking an increment of Rs 156.9 percent. Similarly, the government was able to distribute additional 75,307 permanent account numbers (PAN) to individuals and firms and rope in 15,886 firms in value added tax (VAT) network - higher than the targets of 45,800 and 6,350 set for the year.
Other achievements include, successful investigation into suspicious activities of 518 taxpayers from which the government could fetch Rs 6.59 billion, signing of double taxation agreement with India and implementation of system under which maximum retail price of 11 products has to be declared at customs points.
The finance ministry was able to launch treasury single accounts to facilitate real time management and monitoring of public expenditures in 38 districts during the year, link 10 main customs offices with optical fibers and use banking channel to settle customs related payment at Birgunj, Biratnagar, Bhairahawa and Tribhuwan International Airport customs offices, among others.
The achievements made by the finance ministry in these fronts, however, look hollow in front of failure to create an investment-friendly environment in the country, which is key to ensure economic prosperity.
Finance Secretary Krishna Hari Banskota also acknowledged this weakness while talking to media persons on Sunday.
“At a time when the government is talking about double-digit growth, we have not been able to lure adequate investment,” he said, blaming, “fluid political situation” for the problem. His comments come at a time when various quarters are criticizing the finance ministry for focusing too much on mobilizing as much revenue through imports of goods, without giving much emphasis to sustained economic growth.
The finance secretary also identified inability to enhance the pace of capital budget spending as another major problem faced by his ministry. Although the government had set a target of Rs 58.22 billion in capital budget last fiscal year, it is estimated the real expenditure stood at Rs 43.79 billion in the period.
“To give a boost to capital spending, we must put an end to the practice of changing project chief with the change in the government,” Banskota said, referring to the attempts made by new ministers to change the person steering a project soon after assuming office.
Since the process of appointing a new person to head the project itself takes at least a month and the new person consumes around a month to review the work of previous head, the entire process of spending budget allocated for development works comes to a halt during this process.
“One way to end this problem is to sign performance contract with the head of the project and let the person stay until the project completes regardless of the change in governments,” Banskota said. “This could ensure timely completion of projects and boost capital spending as well.”
Besides, lack of culture of issuing or demanding for bills is also promoting cases of tax evasion, which needs to be corrected in coming days, Banskota said.
´Enforce law for full, timely budget´
Finance Secretary Krishna Hari Banskota has said a law that ensures timely introduction of full-fledged budget, under whatever political condition, should be enforced. He also said national consensus should be forged on common minimum economic agenda and ensure its implementation with sincerity.