KATHMANDU, Nov 21: The government on Tuesday announced a budget of Rs 351.93 billion, ending long-running confusion over fiscal operations for the remaining eight months of fiscal year 2012/13.
The move, which supercedes the prevailing one-third budget, averted a looming budget crunch and fiscal crisis that could have affected the payment of salaries and the delivery of basic health and other services.
But it drew widespread criticism from the 19 opposition parties, including Nepali Congress and CPN-UML, as it was taken without broader political consensus. The government said there was no need to oppose the move because the budget is devoid of any new programs.
“The budget equals what the government actually spent last fiscal year. All the programs were announced by the past government and we are merely continuing with them,” said Finance Minister Barsha Man Pun.
The new budget has set aside around Rs 3 billion for holding fresh elections to the Constituent Assembly and around Rs 3 billion for completing the integration of Maoist combatants.
“These were agreed programs and are crucial for giving new momentum to constitution-drafting and wrapping up the peace process,” said Pun.
The new budget ordinance allows the government to spend Rs 246.87 billion under the recurrent head, Rs 51.34 billion under the capital spending head and Rs 53.71 billion under financing. Rs 50.08 billion has been set aside for servicing domestic and foreign loans.
It has left the tax structure and revenue policies untouched, which means the existing rates of duties and taxes will continue for the remaining eight months of the fiscal year.
For resources, the budget allows the government to mobilize revenue and foreign aid. “We have no authority to mobilize domestic borrowings, because in the absence of a full budget, we do not have authority to mobilize borrowings,” said Pun.
Pun, however, did not shed any light on the revenue target and the foreign aid mobilization target.
“We have set a target of maintaining a revenue growth of at least 22 percent this fiscal year. Also, the foreign aid commitment is strong enough. We are confident it will enable us to mobilize the required volume of resources,” said Deependra Bahadur Kshetry, vice-chairman of the National Planning Commission.
The government has envisaged economic growth of 5.1 percent (at basic price) and aims to contain inflation at 8 percent over the fiscal year.
“I have arranged enough funds for fulfilling liabilities such as payment of social security allowances, providing free medicines and basic health services, and payment of salaries of civil servants, security personnel, teachers and health workers, among other things,” said Pun.
He also committed ample disbursements for national pride and priority projects. “I have arranged enough allocations for counterpart funds for securing foreign loans for crucial development projects,” he said.
Pun admitted that despite all arrangements the capital budget allocation is far less than what agencies executing development projects have been demanding. He even expressed doubts over the new budget giving strong momentum to development work or creating jobs.
“A full budget would have served this purpose. Unfortunately, the oppositions’ resistance prevented us from going for that,” Pun said. He admitted that the present budget structure has left the private sector deprived of any new facilities.
“I appeal to the private sector to exercise patience and work with positive energy. We will make all possible effort to create a favorable investment climate and reduce the cost of production for private players,” he said.