There were disputes in favor and against the budget for Fiscal Year 2078/79 as soon as it was made public. It’s natural for political leaders to have differing views on the budget, but economists are no exception.
Former finance ministers and congressional economists, however, who attended a presentation on Sunday, uniformly rejected the budget. They voiced a common view that the budget was election-focused rather than directed toward growing the country’s economy during a budget assessment program held by the Congress-led School of Democracy. They also stated that implementing the budget is difficult.
The budget debate was attended by former Finance Minister Ram Sharan Mahat, former Governor Chiranjeevi Nepal, former Vice Chairmen of the National Planning Commission Dr. Shakar Sharma, Prof. Dr. Govindraj Pokhrel, Dr. Jagadish Pokhrel, and Economist Dr. Bishwa Poudel.
Dr. Mahat, a Nepali Congress leader and former Finance Minister, claimed that election-oriented activities were presented by artificially inflating the budget’s size. The budget, he claimed, was in violation of constitutional procedure, values, and standards.
“The budget will not be implemented in the future since the administration brought it in an incorrect manner,” he stated. “Only a few of the projects in this budget will be continued in the budget presented by the administration formed following the Supreme Court judgment or after the elections.”
He further claimed that the budget targets were artificial, as they were set by raising spending by 50% in an economy where even Rs 1100 billion could not be spent.
“A distribution-oriented budget was presented, distributing monies for the election and cadres without securing resources,” Mahat explained.
He claimed that the government set an overly ambitious 6.5 percent economic growth target in the budget. He said that last year’s economic growth was negative when the target was 8.5 percent, and forecasted that this year’s target of 7% growth would be limited to about 2% in fact.
Dr Mahat stated that the government has taken excessive external loans. “When I was Finance Minister around six years ago, the national debt was 25.6 percent,” Mahat added. “It’s now at 40%,” says the author. The per capita debt was 26,000 at the time, but in four years, this government has boosted it to 52,000.”
Mahat was enraged by the unjustified increases in social security benefits and pay. He claimed that the law had been broken in regards to employee wage increases.
Shankar Sharma, an economist and former Vice-Chairman of the National Planning Commission, said the budget for the 2018 fiscal year was presented in such a way that the 15th Plan’s ambitions would be pushed even higher. He charged the government with altering Schedule 1 of the budget in order to conceal current spending.
“This budget is presented in a unique way. The budget’s Schedule 1 has been reorganized, with the heading of current expenditures distorted. “Expense headings such as salary, allowance, social security, and so on are not shown,” he claimed.
He also stated that while 90% of current expenditures will be spent, just 80% of capital expenditures will be spent. When the full share of revenue is spent on operating expenses, Sharma believes it will be necessary to seek loans for development purposes.
“External loans and grants appear to be out of step with the budget aims as well. It appears that the fact that COVID has harmed not only Nepal but the entire world has gone unnoticed. We shall be in a financially hazardous scenario if this is the backdrop of expenditure and loans,” he said.
According to Sharma, the budget’s reduction of supplementary and special grants to provinces and local governments, as well as the increase in conditional funds, have generated concerns about the autonomy of local governments.
“The cost of conditional assistance is being raised by the federal government. As the number of conditional grants rises, questions about the state government’s and local government’s autonomy will be raised,” Sharma predicted.
According to him, Nepal spends the most on old age and social security benefits in South Asia. Sharma stated that the administration is very weak in terms of the economy and that achieving the 6.5 percent economic growth target set forth in the budget is tough.
Dr. Govinda Pokharel says that the political ambitions are strong.
Prof. Dr Govinda Pokhrel, former Vice-Chairman of the National Planning Commission, said the upcoming fiscal year’s budget had both positive and negative aspects. He claimed that the Finance Minister’s 500-point budget, which he presented for three hours, had strong pla