KATHMANDU, MAR 21 -
The government has started preparations to introduce an “adjusted budget ” for the current fiscal year within mid-April.
Finance Minister Shankar Koirala has directed ministry officials to prepare for such a budget . However, the officials said the nature of the upcoming budget will be that of a full budget , no matter whatever name is given.
Minister Koirala, talking to the media after assuming the office on Tuesday, had said the ministry would come up with a full budget for the current fiscal year. He had said a full budget was necessary for macro-economic stability and higher economic growth.
The Finance Ministry has lately been lobbying for a full budget for this year, arguing the country needs a full budget to manage necessary resources to meet increased demand from development projects and administrative expenditures, including salary to staff.
Based on the present budget ary arrangement, the ministry says it faces a deficit of more than Rs 6 billion to pay salary to the government staff. Total additional demand stands over Rs 40 billion.
“Preparations have begun to introduce the budget within mid-April,” said a senior ministry official of them ministry. “This budget will have additional arrangements as per the need for resources to fund development activities and recurrent expenditure.”
Finance Ministry spokesperson Krishna Prasad Devkota said preparations are underway to introduce the budget at the earliest. “It would be better to introduce the budget three months before the end of the fiscal year to ensure better implementation,” he said. Devkota said the upcoming budget would not cross the Rs 429-billion ceiling fixed by the National Planning Commission for the current fiscal year.
Failing to introduce a full budget , the Baburam Bhattarai-led government had brought a budget of Rs 351 billion under the budget ary arrangement that the government can spend resources equal to those spent in the last fiscal year. The size of the budget last fiscal year was Rs 386 billion. “As there is limited time to spend the budget , there is no need to increase the size beyond the government’s capacity,” said Devkota.
The ministry is preparing a red book containing the list of budget allocations under each heading for each ministry. The ministry has not prepared the book for this year, and allowed other ministries to fix the amounts under different headings on their own.
The Finance Ministry has asked all the ministries to provide the details of how they have allocated the budget under each heading as well as justification for doing so.
The size of the budget will then be fixed based on the reports submitted by the ministries, according to the ministry officials.
With the introduction of an adjusted budget , the government will have the authority to raise internal loans to meet the deficit which is lacking under the current mechanism.
However, a ministry official said the new budget is less likely to change the target for revenue mobilisation as far as talks have undergone so far. The government aims to raise revenues worth Rs 289 billion.
Although the government has struggled to expedite capital expenditure, revenue collection has remained impressive, particularly due to surge in imports. As of the first eight months of this fiscal year, revenue collection reached Rs 177 billion, against the target of 172 billion, according to the ministry.
Besides introducing a full budget , there has also been an understanding that preparations for the next fiscal year’s budget would be carried out by devising a working schedule in close coordination with the National Planning Commission, said the ministry official.
Cap expenditure at 26 percent
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The government has been able to spend just 26.49 percent of the capital expenditure budget with four months to go before the fiscal year ends. According to the Finance Ministry, capital expenditure stood at Rs 13.6 billion as of February-end, slightly more than the Rs 13.42 billion recorded during the same period last year.
The government has set aside Rs 51.34 billion for capital expenditure. The Finance Ministry said slow expenditure in the first trimester resulted in poor expenditure in this fiscal year.
The failure of the ministries to issue authorization to their implementing agencies to spend the allocated money is another reason that has impended capital expenditure. A half-yearly review of the budget published by the ministry has stated that ministries and agencies failed to authorise the implementing agencies under them to spend 55.66 percent of the allocated budget .
Likewise, the ministries, particularly Education, Urban Development and Irrigation, have not been able to get a majority of their projects approved by the National Planning Commission during the first six months of this fiscal.
However, ministry officials said that expenditure has picked up of late, and there are ample chances that capital expenditure will exceed the allocated budget . “We have received reports that work at major projects is progressing at a very good pace, and we hope that all of the earmarked funds will be spent,” said Krishna Prasad Devkota.
“As the adjusted budget is also set to be introduced this year, we will be giving priority to the existing projects and complete them first.” He added that the ministry would be talking to the secretaries of ministries to speed up projects with a budget of more than Rs 150 million.
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