Govt lowers budget size

Kathmandu, Feb. 12

The government has adjusted the size of budget of the current Fiscal Year 2022/23 by lowering the total expenditure by 14 per cent which brings the budget to Rs. 1549.99 billion.

According to Deputy Prime Minister and Finance Minister, Bishnu Prasad Paudel, the size of budget is Rs. 244 billion from the earlier Rs. 1793.8 billion. Speaking at the federal parliament on Sunday, he said that the estimates for the recurrent budget are brought down to Rs. 1021.9 billion (86.37 per cent) from earlier Rs. 1183.2 billion.

Likewise, initial capital allocation of Rs. 380.3 billion is revised to be Rs.313.8 billion which is 82.51 per cent of the earlier allocation. Meanwhile, budget of financial management is adjusted to 93.05 per cent of the initial allocation of Rs. 230.2 billion.

DPM Paudel also revised the estimates of revenue collection. He scaled down the total revenue estimates by 11.29 per cent of the total target of Rs. 1403.1 billion. Now the government aims to collect Rs. 1244.7 billion revenue in the current fiscal year 2022/23.

The federal government will mobilise revenue of Rs. 1101 billion while Rs. 143.7 billion will be distributed to the provinces and local bodies. Similarly, the target for foreign grants has been brought down to Rs. 38.4 billion from earlier estimates of Rs. 55.4 billion, and foreign loans is downsized to Rs. 170.5 billion against the earlier target of Rs. 242.2 billion.

However, the size of domestic borrowing is not reduced significantly as it is reduced to Rs. 240 billion from earlier estimate of Rs. 256 billion.

The downsizing of the budget, ongoing economic contraction is expected to hit the economic growth. "Considering the current growth of the economy, the target of achieving an economic growth rate of 8 per cent for this year does not seem achievable," said DPM Paudel.

In the field of agriculture, it is expected that there will be some increase in the production of rice this year and it is seen that tourism sector is gradually improving. Despite these positive aspects, economic activity seems to have slowed down as the manufacturing industries are not able to operate at full capacity, DPM told the parliament.

Likewise, against the target of containing inflation withing the limit of 7 per cent, the consumer price index has reached 7.26 per cent.

However, in the six months of the FY 2022/23, the remittance inflow in Nepali currency increased by 24.3 per cent and reached Rs. 585.8 billion. Likewise, in the same period, the current account is in surplus of Rs. 97 billion, while the total foreign exchange reserve has increased by 10 per cent to Rs. 1337.2 billion compared to Rs. 1215.8 billion. It is sufficient to cover the goods imports for 10.4 months and goods and services imports for 9.1 months.

Meanwhile, in the first six months of this year, the total government expenditure has been Rs. 576.3 billion, which is 13.7 per cent more than the previous year. Compared to last year, the recurrent expenditure increased by 11.9 per cent, up from Rs. 455.1 billion, while capital expenses increased by 5.3 per cent to Rs. 53.4 billion.

Likewise, the target for revenue collection by the end of the first half of the current fiscal is Rs. 490.4 billion against the target of 651.6 billion, which is 24.8 per cent less than the target.

Meanwhile, Deputy Prime Minister Paudel while presented half-yearly budget review of FY 2079/80 in the House of Representatives on Sunday. In his address, he said that the government would focus on meeting development targets ensuring resources to the national pride projects.

Addressing the Lower House, the Deputy Prime Minister said that he had concentrated his efforts on solving problems witnessed in the financial sector. “I tried to get confidence of the private sector to improve the distortions and deviations seen in revenue mobilization, and to solve the existing problems in budget implementation,” he said.

He informed the House that the government had adopted a policy of maintaining budget balance, increasing the quality of prioritization of expenditure, emphasizing on increasing capital expenditure, reducing non-essential expenditure and maintaining austerity, making revenue administration more agile, increasing tax compliance and cracking down on leakages.

DPM Paudel further said even though some of the indicators of the economy were in a risky state due to the negative trends that appeared in the world economy, it was on the path of improvement now.

MPs in the House asked questions regarding the statement of the Deputy Prime Minister Paudel and sought clarification. They raised questions about incentives for the producers, relief management and policy facilitations from the government to bring the economy in a normal track. MP Ramhari Khatiwada said only with 16 per cent capital budget spent  in half a year, how would the Minister work for the development of the country. He also asked what measures would be taken to control growing inflation.

Similarly, Prakash Jwala seemed to be worried about the interest rate of commercial banks on lending. “Government should tame interest rates, what plans do you have for managing liquidity?” he asked. 

Another MP Rajendra Prasad Pandey said that the economy was in an uncomfortable position, and asked how the common programmes of the alliance government were incorporated in it. He also asked what was the programme to improve the economy. The DPM responded to the question stating that the common programmes of the alliance government were determined for 5-year tenure which would be carried out within the time frame.

 

Minister Paudel responded to the queries of the MPs clarifying that the previous government had drafted the budget document for the year. According to him, monetary policy would establish a mechanism to control bank interest rates. DPM Paudel also assured the MPs that the budget for fertilizer purchase would not be cut. “There would not be lack of budget for national pride projects,” he added.

 Report tabled

'Fourth Annual Report of the Tharu Commission was submitted to the Lower House on Sunday. Federal Affairs and General Administration Minister Amanlal Modi presented the report on behalf of Prime Minister in the House.

Condolence message passed

Meanwhile, the House of Representatives unanimously endorsed condolence message on the sad demise of former MP Karma Ghale. He was a House member from Nepali Congress elected under Proportional Representation lot in 2074 BS. Ghale passed away at the age of 59 on last Tuesday while undergoing treatment at Tribhuban University Teaching Hospital. 

Published in The Rising Nepal daily on 13 February 2023.