Finally it’s one-third budget

Finance Minister Pun unveiling one-third budget

KATHMANDU, July 16: Finance Minister Barsha Man Pun on Sunday unveiled special budget for 2012/13 through ordinance, agreeing to the oppositions´ demand that the government in the new fiscal year will not spend more than one-third of what it actually spent in this year.

The announcement finally cleared the sized of the new budget at Rs 161.24 billion. But despite oppositions´ resistance, the government made allocations for new headings like constituent assembly (CA) elections, retirement benefits to the ex-Maoist combatants and setting up a new Nepal Army (NA) directorate to conclude the integration.

“I have allocated Rs 3.69 billion to settle retirement benefits of the ex-combatants, Rs 3 billion for setting up NA directorate and Rs 3 billion for holding fresh CA elections,” said Pun while unveiling the budget for upcoming fiscal year.

The allocations drew instant criticism from opposition leaders.“We object such allocations, for the move has yet again proven the government still prefers to chalk out the future course of Nepali politics unilaterally, ignoring oppositions´ concerns,” said Dr Ram Sharan Mahat, senior leader of Nepali Congress.

He even declared that the move has further tapered the chances of political consensus in recent future.

Pun, on the other hand, said those allocations were necessary to conclude the peace process and pave the way for the constitutional drafting process.

As he reiterated that the government will go ahead with the elections, top officials at the Ministry of Finance (MoF) disclosed they can further provide additional Rs 2.75 billion from the Peace Fund, if required, for the elections. “If that too fell short, we can arrange fund from other sources as well,” said a top MoF official.

Of the total allocations, the government has set aside Rs 51.29 billion to meet expenses like debt servicing and expenditures of the constitutional bodies. The fund for this purpose will be provided through consolidated accounts, said Pun, referring that the president allowed him to do so by issuing Ordinance on Authority to spend money from the Consolidated Accounts, as per the article 88 of the Interim Constitution.

Likewise, it has allocated another Rs 109.72 billion, which is one-third of total spending recorded in this fiscal year, to carry out regular administrative works and development activities. This allocations were made as per article 96 (a) of the Interim Constitution.

President Ram Baran Yadav has also allowed the government to continue collecting duties and taxes at prevailing rates; meaning tax and duty structures will not be changed.

The special budget does not allow the government to mobilize national, domestic as well as foreign loans. However, if the allocations fell short, the government can additionally draw overdraft worth 5 percent of this fiscal year´s revenue collections from the Nepal Rastra Bank (NRB) to meet expenses.

“Our calculation is we can mobilize around Rs 12 billion in addition, if required, through this source,” said Finance Secretary Krishna Hari Baskota.

The special budget has averted interruption in regular administration, ongoing projects and salary of civil servants. But it will not enable the government to give pace to the development works and new programs.

“This is a serious setback, but we couldn´t avoid it,” said Pun.

This is not the first time the country got special budget though. The then Finance Minister Ram Sharan Mahat had first unveiled special budget of Rs. 73.54 billion in 2008 after the country faced a political deadlock over the formation of a new government. Later in 2010, the then Finance Minister Surendra Pandey too announced similar budget of Rs 110.21 billion.

Private sector bodies like Federation of Nepalese Chambers of Commerce and Industry expressed dismay over the special budget, for it does not cites government´s programs and priorities. In the absence of clear revenue policies and priorities, it said the country would simply fail to draw fresh investments.

“The private sector´s confidence is lost,” said Pashupati Murarka, FNCCI vice president.

However, Pun called on investors to openly invest in the new ventures in Nepal, saying the government´s priority was clear. He also appealed all, including opposition parties, to take initiatives for creating environment for consensus so that the country could have full-fledged budget soon.

Budget: Against the spirit of consensus

Former Finance Minister Dr Ram Saran Mahat

The government has violated political norms by allocating unnecessary budget for election that will be impossible to hold without consensus. Appropriation of excessive budget to fund voluntary retirement of ex-Maoist combatants and integration into Nepal Army are also aimed at appeasing Maoist cadres.

It is objectionable that the finance minister blamed other political parties for the failure to forge consensus on full-fledged budget. The fact is that the constitution doesn´t allow it to come up with such a fiscal policy.

Former Finance Minister Dr Prakash Chandra Lohani

The allocation of budget for elections without political consensus is a glaring example of stubbornness of the current government. Besides, the integration of Maoist cadres into Nepal Army will not start immediately and it shouldn´t have allocated Rs 3 billion for a new directorate in Nepal Army. Rs 3.69 billion to pay off former Maoist cadres who have opted for voluntary retirement is also excessive.

It looks like the current government has forgotten the label of ´caretaker´ attached to its name.

Shanker Pokharel, UML leader

The government should have focused on forging political consensus to pave way for election rather than allocating budget unilaterally for the polls. The government has also allocated excessive funds for integration of ex-Maoist combatants into Nepal Army and voluntary retirement scheme without charting out clear process and modality to spend the amount.

We are skeptical on whether the amount allocated for integration and voluntary retirement will be utilized properly.

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