HEADLINE NEWS THE RISING NEPAL (DAILY)

Experts sore over rising regular expenditure
Dr. Mahat denies escalation in fund to MPs

BY A STAFF REPORTER

Kathmandu, May 4: As the country prepares for the national budget for the fiscal year 2001-2002, economists and management experts expressed concerns over the ever-swelling regular expenditure.

They say that the approximate 60:40 ratio of the regular expenditure-development expenditure persisting in the budget should be either reversed or, at least, the latter’s proportion needs to be increased, if we are to accomplish the national objective of economic and social development. They also stressed on the increment and more judicious allocation of the budget for development expenditures and effective implementation of budgetary plans.

They were zeroing on in the agenda of the forthcoming budget at a Pre-budget Discussion Programme held here Friday under the aegis of the Management Association of Nepal (MAN).

Chief guest of the discussion programme Finance Minister Dr. Ram Sharan Mahat said that, despite many efforts, the government at the moment is not in a position to slash the budget for regular expenditures.

"The government faces obligations to meet expenses for salary, pension, security, and many administrative expenses, which are steadily increasing," Dr. Mahat said acknowledging that the current trend of increasing regular expenditures is dangerous.

"Social and financial indiscipline, hard working followed by soul searching are key to economic development in any country," he said calling on active co-operation from academicians, economists, employees, media, civil society and all concerned in its bid towards economic reforms and development.

Minister Mahat also denied the rumours that an amount of Rs. 10 million instead of Rs. 1 million is being allocated for each constituency to be supposedly disbursed to each member of the parliament.

At a time when the government finds itself sandwiched between its increased social obligations, and the enhanced role of emerging private sector in the economy, the experts also suggested the Finance Minister to provide for more effective measures in the budget that will ensure cost control instead of going for enlarging the budget volume.

On the fiscal policy front, they emphasised the need for the broad-based income tax system so as to increase revenue collection, while they recommended more effective implementation of the present value added tax system. They say effective review and control mechanism are a must for effective resource mobilisation. They also identified the information technology (IT) development and human resource development (HRD) as the key areas that the upcoming budget must address.

Presenting his paper at the function, management expert and economist Dr. Minendra Rijal illustrated privatisation as a means to generate resources for investment. "…the overall return on capital employed on the state owned enterprises (SOEs) averaged 2 per cent during the last two years, moreover, as the benefits of public investment on the SOEs accrue largely to relatively better-off segments of the society, it is hard to justify such a high level of investment in them on equity ground," he observed referring to the HMG’s planned investment of Rs. 12.4 billion in the SOEs. It is comparable with the fact that programmes targeted to the ultra-poor has received less than Rs. 400 million of the budget allocation.

He also recommended renewed emphasis on agricultural sector and stressed the need for foreign direct investment (FDI) for hydropower and infrastructure development.

Presenting his paper, former governor of Nepal Rastra Bank Satyandra Pyara Shrestha observed that, despite good macro economic indicators, there is the need for continued reforms. He also suggested measures for economic stability and banking sector reforms. He urged the government to be selective about the recommendations of Public Expenditure Review Commission (PERC).

The both paper presenters stressed on the need for export promotion and making Nepal’s trade more effective.

Dr. Madan Dahal and Dr. Roop Jyoti commented on the papers.

At the function chaired by the MAN chairman Dr. Yubaraj Khatiwada, the Outstanding Management Award-2000 was bestowed upon the chairman of the Soaltee Group Pvt. Ltd. Prabhakar Shumsher Rana.

Award recipient Rana, MAN’s Dr. Yubaraj Khatiwada, Dr. Soorya Lal Amatya, and Purushottam Ghimire also expressed their views in the programme.

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