‘Implementation challenging given govt’s poor track record’

- Post Report, Kathmandu

May 30, 2016-

Former and sitting ministers from ruling and opposition parties expressed divergent views over the budget for the next fiscal year, but all admitted that implementation will be challenging given poor execution capacity of state mechanisms.

Ruling party leaders supported the priorities of the budget presented on Saturday, but opposition leaders termed the budget “distributive” and said it could push up the inflation rate that is already close to double digits.

The hike in the salaries of government employees and increased social security budget, among others,  are expected to create more demand, leading to higher inflation. The government has targeted inflation of 7.5 percent for the next fiscal year.

“The government faces a tough challenge to reviving the economy that has seen slowed growth in recent years,” said Bharat Mohan Adhikari, former finance minister and CPN (UML) leader. “The Public Procurement Act should be fast-tracked, ministers and project heads should be held accountable if development projects do not start within one and half months from the specified time,” he said at an her on Sunday, adding implementation is possible only if the coordination between government authorities is strengthened.

Former minister and Nepali Congress leader Prakash Sharan Mahat said the bigger budget size will create inflationary pressure as chances of most of the funds being spent on administrative works are high. “The expectation of foreign aid mobilisation and revenue collection is also not realistic,” he said. 

Finance Minister Bishnu Poudel, however, defended the allocation for recurrent expenditure stating the share of recurrent expenditure has been reduced compared to the current fiscal year.

At a press meet at the Finance Ministry on Sunday, Poudel said share of recurrent expenditure has been reduced by 0.1 percentage point. The budget has made allocation of Rs617.16 billion under recurrent heading. Total size of the budget is Rs1.04 trillion. Poudel said the foreign aid estimate was also made based on commitments received from donors. 

Former finance minister Barsha Man Pun said the budget has prioritised overall economic development, while addressing concerns of the general public and the private sector.

“Sector-wise allocation is fair and plans to build petroleum storage facilities, medical colleges, and industrial zones in each state match the goals to achieve economic prosperity,” he said. “However, given low capital budget spending in the past, meeting the target of 76 percent of capital expenditure is challenging.”

He suggested the government focus on projects where ground realities match with plans and policies. To ensure a fair spending in all of the priority areas, Pun suggested coordination between line ministries and public offices and authorities.

Former finance secretary Rameshore Khanal said although the budget has “a progressive approach” that matches the requirements of a federal democratic republic, targeted economic growth would not be achieved without spending the entire capital budget. 

The government has allocated Rs311.95 billion as capital budget for the next fiscal year.

“The government needs to spend 46 percent of the total Gross Domestic Product (GDP) to achieve the targeted economic growth of 6.5 percent, but history suggests the government spending has never crossed 30 percent of the GDP,” said Khanal. “This ambitious target can only be achieved if government materialises development plans and raises economic output while controlling inflation.”

Published: 30-05-2016 08:53

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