May 20, 2005

Finance Minister Madhukar SJB Rana has an uphill task presenting a budget that could inject confidence to the country

By SANJAYA DHAKAL

Budgets are not just the financial statements and lists of projects and plans. They are the documents that need to inspire and inject sense of confidence in all sectors of national life.

Budget discussion : Timely exercise

In a critical situation like these, it will be difficult, if not impossible, for the Finance Minister to come up with a budget that will succeed to do so.

Last week, in a significant pre-budget discussion on the “Macro Economic Issues for the Forthcoming Budget” jointly organized by the Management Association of Nepal (MAN) and Nepal Britain Chamber of Commerce and Industry (NBCCI), FM Rana said that the forthcoming budget will be “realistic” and not “ambitious.” At a time, when the country is devoid of parliament, the efforts made by civil society professional organizations like MAN and NBCCI to hold public debate on budget preparation assume high significance.

Speaking in the program, FM Rana said that the government was holding a meeting of local donor partners on June 6 to discuss with them and determine the level of assistance that it can be sure to get. “We want to include only the committed level of assistance in the budget.” FM Rana added that the government will live by the commitments it had made to the donors and that it respects their Basic Operating Guidelines.

He said the budget would attempt to provide vision for three years with focus on equity, justice and stability. He promised programs for rehabilitating sick industries. He, however, hinted that there would be no scaling down of security expenditure. “We should not be conflict-blind while making budget. We have to understand that peace is the priority and, therefore, cut-back in security expenditure is not an acceptable proposition,” he said.

Minister Rana added that in the last 100 days, the country was able to maintain financial stability and even inject confidence as shown by continued boost in Stock Exchange indices. “Due to efforts of security agencies, many transport syndicates have been broken, which has brought down transportation costs,” he said. He also said the budget will focus on transforming the country into that of a transit/bridge economy. “This budget will be the most participatory and transparent,” he promised. “Poverty alleviation through PRSP and ushering in private sector-led economic growth would be the twin pillar of the budget,” he said, adding that the 21-point policy of the government would be his guiding document.

Economist Dr. Pushkar Bajracharya presented a paper highlighting the characteristics of Nepalese economy while industrialist Rajendra Khetan made a number of suggestions on behalf of the private sector. Khetan recommended a series of policy measures including expansion of tax base, implementation of true one window mechanism to facilitate investment, contract farming rules to usher in commercialization of agriculture and so on.

In a separate program last week, the Finance Minister had said that the government planned to introduce three-year ‘Industrial Investment Plan’ by identifying feasible areas. “The plan would promote industrial investment, identify areas with competitive advantage and prepare conducive environment,” said Rana, adding that the major objective of the plan will be to develop Nepal as transit point between India and China.