Priority to capital expenditure in next year's budget: FM

 Kathmandu, Apr. 7

The government is going to prepare the next year's budget with a policy to increase capital expenditure by adopting frugality in recurrent expenditure.

Although there are little chances to reduce general expenses, the government will cut the expenses of the programmes of minimum utility and importance, Finance Minister Dr. Prakash Sharan Mahat said the journalists at a meeting with Nepal Association of Financial Journalists (NAFIJ) on Friday at his office at the Singha Durbar.

For the last several years, the government has been unable to meet the targets for the mobilisation of revenue as well as the expenditure. Former finance ministers have adjusted their budgets during the half-yearly review.

Likewise, as per the statistics of the Financial Comptroller General Office, the government could spend only 26.14 per cent of the Rs. 380.3 billion capital budget by Friday.

Recurrent expenditure have reached 57.16 per cent of the total estimates of Rs. 1183.2 billion while revenue collection has stood at only 46.26 per cent of the annual target. Former FM Janardan Sharma had announced that the annual revenue collection would be Rs. 1403.1 billion.

FM Dr. Mahat expressed his commitment that he would put his efforts to formulate a pragmatic budget and would also devise strategy to utilise it.

"I know that there will be demands for many projects from the line ministries, but they will be included in the budget on the basis of priority. There is a problem in the capital expenditure of the government and it is necessary to develop a system to spend the capital expenditure on time," he said.

He maintained that he would put an end to the situation where infrastructure construction is not completed on time, and its time and cost keep on increasing. The government will adopt a policy to spend the capital budget within the allocated time, and concentrate investment on a few priority projects.

According to FM Dr. Mahat, the governments in the past had set revenue targets higher than the Gross Domestic Product and other economic indicators for many years in the past, and had been achieving the targets as well. Nepal's revenue targets as well as the results were better than its neighbours.

"So, there is a sort of panic when we failed to achieve the target this year. I think, the ban on imports, coronavirus pandemic, and international situation like Russia-Ukraine war have impacted the revenue collection," he said.

Stating that there is a problem in the economy due to the disturbance in the investment environment, and high interest rate on bank loan, FM Dr. Mahat said that he is continuously discussing the issue with the Nepal Rastra Bank to find a solution to it.

He also said that if there is a possibility to bring the interest rates down, the banks should help in this initiative.

Similarly, Finance Secretary Toyam Raya said that the government is putting its efforts to include every worker from the private sector in the Social Security Fund.

He said that the government will not be able to provide social security allowance for a long time.

He said that the government has given instructions to the relevant agencies to stop the revenue leakage at the checkpoint. Admitting that there is revenue leakage as there are many open borders in Nepal, he said that the government is trying to control it.

Published in The Rising Nepal daily on 8 April 2023.