NPC suggests increasing fiscal space for government

Kathmandu, Apr. 20

The National Planning Commission (NPC) has suggested the government to bring about the policy and programmes with a focus on increasing the fiscal space by forging better inter-ministerial coordination.

"Recognising the status of poor revenue collection over the years, we decided to recommend to search space of new sources of revenue, expedite the development work and complete the projects in time, and for timely disbursement of dues to the private sector entrepreneurs," Vice-Chairman of the NPC, Prof. Dr. Shiva Raj Adhikari, while handing over the report to Deputy Prime Minister and Ministr for Finance, Bishnu Prasad Paudel.

Fiscal space is creating room in the annual budget and is important for the government as it helps in allocating resources in key programmes without weakening the country's economic stability. It enables the government to take bold steps such as rising spending or lowering taxes when needed.

The federal planning body handed over the Policy and Programmes Report prepared for the upcoming budget of Fiscal Year 2024/25 to DPM Paudel at the Ministry of Finance (MoF) on Sunday.

In the report prepared after consultation with development ministries, the NPC stressed on proper utilisation of the available and potential resources.

"Programmes that foster synergy and contribute to sustainability during implementation, while generating minimal or no trade-offs, should be prioritised in proposal and budget allocation," read the report.

It also recommended that the budget proposals and allocations should prioritise programmes and projects that support increased production, productivity, and employment generation.

According to the NPC, only those programmes and projects that will incur and can realistically utilise expenditures in the upcoming fiscal year should be proposed and allocated budget. Likewise, priority should be given to budget proposals for multi-year projects and programmes that have created liabilities in the current fiscal year and are expected to be completed by the next year.

 

Reprioritise ongoing programmes

"Ongoing programmes and projects should be reprioritised and allocated based on their nature, implementation status, project duration, incurred liabilities, and expenditure potential.  Duplicative or overlapping programmes and projects of a similar nature should be reviewed, merged, or eliminated as necessary," suggested the report of the NPC.

VC Prof. Adhikari said that in the current context, priority should be given to the maximum utilisation of existing institutional structures rather than creating new ones.

Similarly, the report observed that some officials believe the budget ceilings for certain ministries and agencies are too low, and in some cases, even regular and recurrent expenditures must be met through foreign aid, making the budget and programme proposal process challenging.

Other recommendations also include aligning budget proposals with the framework of the sixteenth periodic plan and Sustainable Development Goals, entering the qualified projects to the project banks, and striking regional balance.

"The allocation of projects and programmes must comply with the standards related to the distribution of development projects across the three levels of government," it said.

 

Focus to strengthening economy

DPM Paudel expressed his belief that the report would help in guiding the budget of the next FY 2025/26.

He stated that the budget of the next year will be focused on the creation of strong national economy backed by infrastructure and industrial development.

DPM Paudel is also for tightening the size of budget to all ministries and implementing agencies and is not in the mood to allocate funds to the projects and programmes that will not contribute to capital formation or create facility to the publics.

He said that the achievement of the set target of the economic growth couldn't be achieved but there wouldn't be a situation to be pessimistic.

"Of late, the government has been putting its efforts to address the challenges in the economy especially in the manufacturing sector. We have been working to facilitate the private sector so that more investment would be attracted and jobs would be created," he said.

According to him, the country has reached to the much-desired political stability after a prolonged instability but some reactionary forces are trying to destablise this stability.

This stability is not sought for the ruling parties or coalition but for the reforms and progress, maintained DPM Paudel. 

Published in The Rising Nepal daily on 21 April 2025.