budget 2014-15: Govt to focus on infrastructure development


May 21, 2014-

New budget will focus on infrastructure development, with a significant allocation of resources to the development of hydropower plants and transmission lines, Finance Ministry officials revealed on Wednesday, three weeks before the presentation of the next fiscal spendings.

Expansion of road connectivity, improving rural infrastructure and agriculture development will be other key components of the budget.  

This was also echoed by Finance Minister Ram Sharan Mahat when he met with representatives of the donor community during a government-donor meeting at the ministry on Wednesday. “Our policy and priority for the next year will focus on attracting investments to accelerate economic growth, particularly through investments in infrastructure,” said Mahat.

The government has accorded top priority to infrastructure development, stating that infrastructure gap and policy barriers have remained bottleneck to country’s growth despite significant improvement in social indicators.

A recent World Bank study has suggested that Nepal would need $13-18 billion from 2011-2020 to bridge the investment gap in infrastructure, with the energy sector requiring a bigger chunk worth $5.3-7 billion.

According to the Finance Ministry, Nepal needs to make an additional Rs 160 billion capital investment annually to achieve 8 percent annual growth—a growth rate essential to attain the status of developing country.

“As the government has limited resources, the focus will on attracting more domestic and foreign investments in the sector by creating an investor-friendly environment,” said Finance Secretary  Yubaraj Bhusal.

He added that international institutions like European Investment Bank and China Construction Bank are interested to invest in Nepal’s energy sector.

Other infrasructure such as roads, irrigation, agriculture and tourism will also feature prominently in the new budget, with a focus on increasing youth employment in the agriculture sector.

“Policy related to contract farming and land banking will be adopeted to encourage youths to engage in commercial farming,” said Bhusal. Increasing production, farm mechanisation and expansion of farm technology will be other priorities in the sector.

The government will prioratise the promotion of backward regions for tourism, including mid-western and far-western regions. On Wednesday, the government decided to open 104 new peaks—most of them from the two regions—for commercial climbing. The governmnet is mulling to promote Nepali section of Great Himalayan Trail, the longest alpine walking track. The trail extends from Darchula and Humla in the west to Kanchanjunga in the east and it would take around 157 days to trek.

The government is taking a number of measures to improve the implementation rate of development projects through better mobilisation of capital expenditure. As of May 20, only 36 percent capital budget has been spent. Bhusal said the new budget will also talk about introducing a new Public Procurement Act and controlling contrator-related problems. There is a growing tendency among contractors of taking 20 percent mobilsation fund in advance to add up to their profits while starting project works late.

The government will also make a policy statement on the second generation economic reforms through the budget, Bhusal said. The reforms will incorporate issues, including proper regulation of financial, educaton and health sectors and law and order related problems.


Published: 22-05-2014 09:28

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