INSUBCONTINENT EXCLUSIVE:
KATHMANDU, FEBRUARY 12The Ministry of Finance has reduced the budget size for the current financial year by 14 per
cent to Rs 1,549.99 billion through the mid-term budget review
The budget of Rs 1,793.83 billion for the current fiscal year was presented by former finance minister Janardan Sharma on May 29.
Mid-term evaluation: Budget size reduced by 244 billion
7.26 per cent
Primary allocation towards
recurrent expenditure was equivalent to Rs 1,183.23 billion
This has been trimmed to Rs 1,021.92 billion.
Similarly, the initial allocation towards capital expenditure was Rs 380.38
This has been slashed to Rs 313.5 billion.Likewise the initial allocation of Rs 230.21 billion towards financing has been decreased to Rs
214.21 billion.Presenting the mid-term evaluation report of the current fiscal year at the Parliament today as per Sub-section 5 of Section
23 of the Fiscal Procedures and Financial Responsibility Act 2009, Minister Bishnu Paudel said although the government formed after the
election was supposed to mobilise more resources to meet people's desire for development, the ministry has been forced to take drastic
measures to balance the budget."The Parliament is aware that economic activities in all sectors have been affected due to the lingering
Besides, the war in Ukraine has disrupted supplies globally and the policies of major economies has added to the challenges of economic
Besides, some short-term measures taken to keep the economy running during the COVID-19 pandemic were not reviewed on time and modified,
hence, the problem increased
The half-yearly budget review shows the impact of import regulation and economic slowdown has negatively affected revenue growth and has put
extreme pressure on the government's financial balance
There is thus need for strategy to control business disruption and revenue leakage resulting from the open border and the informal economy,"
he said.Paudel said it was unlikely that the target of achieving economic growth rate of eight per cent would be met.Although some increase
in rice production alongside improvements in the tourism sector is expected, the manufacturing sector is not operating at full capacity
This has affected economic progress.Similarly, the average consumer price index-based inflation has reached 7.26 per cent compared to the
target of limiting it to seven per cent.The total domestic credit also increased by 2.8 per cent while deposits collected by banks and
financial institutions increased by 4.2 per cent in the first six months of the current financial year
Likewise, total exports slumped by 32 per cent, while total imports decreased by 20.7 per cent
Meanwhile, the trade deficit also narrowed by 19.2 per cent to Rs 711.86 billion.Revenue collection also decreased by 24.8 per cent or Rs
490.40 billion compared to the target of Rs 651.62 billion in the first six months."The ministry has adopted a policy of maintaining budget
balance, prioritising expenditure and increasing quality and capital expenditure, reducing non-essential expenditure and making the revenue
administration more efficient, increasing tax compliance, and controlling leakages.However, due to some structural limitations and
international influences, it seems reform efforts will take time to give concrete results," he added.The ministry has decided to adopt
measures to reduce expenditure and revenue mobilisation.The MoF has slashed its initial revenue collection target of Rs 1,403.14 billion to
Rs 1,244.75 billion.Programmes not yet approved for standards, procedures, guidelines, and operating methods will be suspended in whole or
Also, even though the standards, procedures, guidelines, and operating methods have been approved by the MoF, programmes not implemented
before preliminary preparations are completed, will be fully or partially suspended.The projects that have received resource consent from
the MoF, but are yet to be implemented will also have to retake consent from the ministry.The MoF has also directed concerned bodies not to
propose new programmes and projects as it creates additional liabilities.Concerned ministries can determine their budget and programme
priorities and propose internal adjustment of resources to MoF accordingly.Also, the unspent budget will have to be submitted to the
MoF.Likewise, the ministry has decided to make information exchange and coordination more effective among agencies involved in revenue
The ministry has also assured it will bring those involved in revenue leakage to book and ensure compliance with tax laws.The government
will mobilise high-level teams to control and monitor illegal imports and exports
Priority will be given to recovery of revenue arrears
Moreover, new bases and sources of non-tax revenue will be identified and service delivery will be made more effective
According to Paudel, the revised estimates of revenue and expenditure will lead to expansion of economic activity and improved revenue
collection."If the revised estimate of revenue collection is not achieved, public expenditure will have to be tightened
For this, the ministry will periodically analyse the trend of the economy and estimate the challenges that may come, and based on that, make
more policy arrangements," Paudel said.More policy arrangements will be needed if expected improvements are not madeA version of this
article appears in the print on February 13, 2023, of The Himalayan Times.
This article first appeared/also appeared in https://thehimalayantimes.com