Print Edition - 2014-07-13 | MONEY
‘New budget will be reform-oriented’
Jul 12, 2014-
Finance Minister Ram Sharan Mahat will present his seventh budget on Sunday. As a five-time finance minister, Mahat knows well what should be the government’s priority to kick start the economy amid growing optimism after the Constituent Assembly election. Prithvi Man Shrestha of the Post caught up with Mahat to talk about the new budget’s policy direction and priorities. Excerpts:
What will be the budget’s main characteristics?
It will be a reform-oriented budget which will give definite economic direction to the country. No new reform initiatives have been taken after the first round of economic reforms initiated in early 1990s. Hence, we are now moving towards further reforms based on our experience over the last two decades.
As for new reform initiatives, we will introduce new policies and Acts, amend existing ones. There is dire need for reforms in the areas of industry, hydropower and financial sectors as well as foreign exchange, investment promotion and foreign investment.
There is also a need for enhancing the capacity of government institutions to administer development projects. The new budget will also address these issues. Crating a business-friendly environment will be another aspect of the new budget.
You were one of the architects of the 90s economic reforms which opened many sectors and many public enterprises were privatised. However, the privatisation process has been halted for a long time now. Does this come under your priority? Will the budget announce privatisation of public enterprises?
Privatisation will be done. But there are many models of privatisation—from outright privatisation, management contract to leasing out. There are many public industries that have long remained closed and they need to be brought back into operation.
The government’s Policies and Programmes have announced declaring the “Decade of Agriculture Revolution”. What are the major initiatives that the budget will adopt to materialise this objective?
Well, one year’s budget is not enough to bring about revolution in the agriculture sector. But we have made the government’s intention clear regarding the sector. The budget will focus on high value crop production and their exports to substitute food imports as well as enhancing export capacity of some agro products. New polices and measures will also be taken to encourage engagement of young generation in agriculture.
Will the government develop the Kathmandu-Tarai Fast Track road on its own or will wait for the private sector investment?
There will definitely be budget allocation for the Fast Track. Although previous efforts to bring in foreign investment into this project did not materialise, foreign investors are still interested in the project. We will give one more try to bring foreign investors on board. But government will develop itself if the private sector does not come.
Kathmandu valley’s lawmakers have demanded unified programme for the valley’s development. Will this demand be met?
Definitely, the government will introduce programmes to develop and modernise the Valley in a coordinated way. There will be a programme for unified development of sanitation, ecological development and drinking water sectors.
We have heard the government is giving incentives on imports of big busses before the SAARC summit?
Why to wait the SAARC summit. It will be better if big and luxury buses come before the summit as there is a need for improvement in mass transportation. Taxis and buses plying on the valley’s roads are old and worn-out. After the road expansion, there is space for big buses. In this context, we have sought recommendations from the Department of Transportation regarding the incentives. The Finance Ministry is ready to give incentives through the budget if better vehicles are necessary.
You’ve been talking that huge investment is required for infrastructure development. However, efforts to establish an infrastructure development bank have not been fruitful. Does the upcoming budget have plans on establishing such a bank?
We are seriously thinking about establishing an infrastructure bank. There is a need for such a bank with a paid-up capital of at least Rs 15 billion. Although a policy was announced to transform the NIDC Development Bank into infrastructure development bank, it will not be sufficient. Hence, we can merge Hydroelectric Investment and Development Company (HIDC) and NIDC and make additional funding to for a bigger infrastructure bank. We are looking for it.
What will be the size of the new budget?
Based on the demands, it will be difficult to maintain the budget size within the ceiling prescribed by the National Planning Commission.
You have stressed on the need for power trade agreement (PTA) with India for increased investment in the energy sector. Will there be any such agreement during the Indian Prime Minister Narendra Modi’s expected visit to Nepal?
I cannot say about it as some other ministries are working on this issue. But the PTA is essential for the power sector’s development. There are so many power trading companies in India and we should also have such companies to trade in power with them. We have to engage in power trading with Indian companies. We can import power from India during deficit and export when there is a surplus.
Will the new budget hike salaries of government employees?
There is a huge pressure for salary hike. We are seriously thinking about it.
Published: 13-07-2014 09:48