Three-Year Plan

Finance Minister wishes to prepare the budget with plans for three-years

By SANJAYA DHAKAL

Finance Minister Madhukar SJB Rana is a busy man these days. Every other day, he is attending various programs organized by different associations and federations to discuss the upcoming budget.

Rana has been saying that the new budget, which will be unveiled sometime in mid-July, will be based on plans for three years. Rana has said that he doesn’t want the budget to merely be an estimate for income and expenditure but a document based on long-term vision.

Speaking at a program organized by Nepal Chamber of Commerce (NCC) last week, FM Rana said that the new budget will be ‘realistic.’ “A realistic budget that will guide the economic growth of three years will be formulated,” he said.

This remark is meaningful since in recent months many donors have backed out from assisting the government citing adverse political changes. “The budget will only include the projects for which resources are guaranteed,” the minister had earlier said.

Given the shrinking domestic sources of income, the budget could make new announcement regarding tax rates or bases. Although there were reports that the FM could announce further hike in the rate of Value Added Tax (VAT) from existing 13 to 15 percent, Rana quickly rejected the reports.

 Anyway, for a FM who had agreed to review the hike in VAT rate from 10 to 13 percent immediately after he was appointed, to make such a U-turn and even hint of further hike is an indication of the situation of domestic resources at disposal vis-à-vis the growing demands for the same.

“The budget will be aimed at maintaining fiscal stability and minimum growth rate,” Rana said.

Entrepreneurs are in no mood to welcome any new addition or hike in the existing tax rates. They have advised the government, time and again, to widen the tax base and refrain from hiking the rate. They are also demanding policies to increase exports and help the ailing industries.

Economists, on the other hand, see the utter necessity of continuing development expenditures. They have asked the government to put all the projects in first priority and frame policies aimed at helping 80 percent of population that is dependant on agriculture. Professor Dr. Bishwambher Pyakuryal advised the government to put all the important projects in first priority and do away with practice of assigning second or third priority since the projects belonging to latter two priorities are not really implemented. He added that maintaining a minimum level of development was crucial for the financial health of the country.

Homework On Transit Point

The government is engaged in homework to prepare a national concept paper on Nepal becoming a ‘transit point’ between India and China . The task force for this purpose led by Dr. Shankar Sharma, vice chairman of the National Planning Commission (NPC), recently held its first meeting.

The task force has decided to set up two separate sub committees – headed by Commerce Secretary Bharat Bahadur Thapa and president of Federation of Nepalese Chamber of Commerce and Industry (FNCCI) Binod Bahadur Shrestha – to conduct extensive study on this issue.

Thapa-led sub committee will coordinate government bodies whereas Shrestha-led sub committee will hold consultations with the private sector. The members of the task force – which include Foreign Secretary, Labor and Transport Secretary, FNCCI president and Nepal Chamber of Commerce president – are also preparing separate strategy papers.

 “After all of them prepare their papers, an integrated strategy paper will be prepared based on them,” a source said. “And we will initiate efforts to have trilateral agreement with India and China based on those strategies.”