 |
Kathmandu Thursday December 06, 2001 Marga 21, 2058.
|
Govt set to
overhaul budget
Development projects to bear the brunt
By Ram Sharan Sedhai
KATHMANDU, Dec 5 The current
budget is set to undergo drastic changes as the government prepares to unveil new
financial measures to accommodate the extraordinary security demands of the state of
emergency.
The changes in the budget are
to be announced through a royal ordinance, a highly placed government official told The
Kathmandu Post. The announcement could come soon.
The government has cut
development expenses in the past too, but an ordinance is required to increase the
internal loan in order to meet the growing security expenses, officials say. The
government is planning to curtail some low priority sector projects, as well as slash
expenses on some heads.
The National Planning
Commission (NPC) is currently in the process of identifying the projects to be scrapped.
The government’s budget priorities are also being re-oriented. A top NPC official
said the government’s move would have an impact on almost 50 per cent of the
budgetary projects for the fiscal year 2001/2002.
Since there are around 100
donor-funded projects, a large number of development projects would be affected by the
changes in the budget. About Rs 10 billion will be diverted from those projects to
security arrangement, said the source.
However, the appropriated
amount on ongoing projects and those directly related to the social sector, would not be
scaled down. Similarly, the budget on health sector would not be cut, according to the
source at the Finance Ministry.
There would be immense
pressure from different quarters while cutting the budget on development projects.
Therefore, the budget of those projects that are still in the pipeline and those that are
not donor-funded, will be the first ones to be reduced. And later some of those projects
could be resumed based upon the priority assigned to them by the secretaries of the
respective ministries, said the NPC source.
"The government has
agreed to make changes in the current budget through an ordinance and the cabinet will
approve it soon," the official told The Kathmandu Post. Whether a supplementary
budget will be introduced or amendments will be made to the current one is not decided
yet. According to a highly placed source at the Finance Ministry, discussions are on to
cut the constituency development fund by 50 per cent, and to scrap some of the low
priority projects, which have no foreign funding. Currently, Rs 1 million each has been
appropriated for 265 parliamentarians including the members of the Upper House. A Supreme
Court decision a couple of months ago had ordered the government to earmark the budget by
formulating proper laws.
The source at the Finance
Ministry also said that the regular expenditure is expected to rise by almost Rs 4
billion. The government has decided to meet the increased amount through internal loans.
The budget has made a provision whereby Rs 9 billion could be borrowed in the form of
internal loans.
The government had proposed a
Rs 99.79 billion budget for the current fiscal year of which Rs 14.12 billion is to be
covered by foreign assistance, Rs 16.42 billion from loans and the rest from revenue and
internal loans. Though the budgetary target is to collect Rs 60 billion from revenue,
given the present trend, it would not be able to realize more than Rs 56 billion. This too
has prompted the government to cut down on development funds.
The government is forced to
increase the amount of internal loan in order to meet the growing security expenses, which
otherwise would have had an adverse impact upon the economic stability. Due to rising
regular expenditures, the government had drawn an overdraft of over Rs 6 billion in the
last fiscal year, going beyond the set limit. This fiscal year too, the government has
drawn an overdraft exceeding the threshold.
The Finance Minister, Ram
Sharan Mahat, had only recently said that since maintaining peace and security is the
prime job of the government, it shall be following a policy of fulfilling all the
reasonable demands of the security forces even if development funds had to be reduced
significantly.
However, the government has also
made overtures to the donor agencies to provide it with additional financial assistance,
with a view to giving continuity to development activities. The donor agencies, on their
part, have responded to the call positively, said the source at the ministry. The fact
that a recent IMF report had good things to say about reforms in Nepal’s financial
sector has also heightened the possibility of additional assistance from donor agencies.
Other Stories
|
