Finance Minister Yubaraj Khatiwada said Thursday that the 2018 federal budget would be fiscally prudent and reflect the government’s fiscal consolidation efforts for stable and higher economic growth.

The constitution requires the government to present the annual budget on May 29. The finance minister said it would contain reform-based programmes.

Addressing a pre-budget discussion event organised by the Management Association of Nepal, he said, “It will not incorporate any populist programmes like past governments have done.”

Khatiwada added, “A clear demarcation of taxable sources, prudent use of the state coffers and protection of domestic products with competitive and comparative advantage will be our key priority. The government will not use arbitrary data in the name of introducing a populist budget.”

He also criticised the previous government for issuing a populist budget that created excess liabilities in the government’s financial plan.

The country’s budget for this fiscal year ending mid-July is worth Rs1,279 billion. For the next fiscal year 2018-19, the National Planning Commission has set a budget ceiling of Rs1,200 billion.

The government has adopted a policy to introduce austerity measures due to a shortage of funds and a widened budget deficit.

The budget deficit has been attributed to high recurrent expenditure, error in calculating savings in the last fiscal year and low mobilisation of foreign grants.

The finance minister also hinted at expanding the tax base, introducing a clear demarcation to remove double taxation, reforming the tax administration and removing ambiguous taxation provisions related to the financial sector in next year’s financial plan.

“If the private sector produces a logical framework to safeguard domestic products, the government is ready to introduce a policy to protect a selected range of products that have high competitive and comparative advantages.”

Meanwhile, the private sector has urged the government to revise the provision for capital gains tax in the upcoming budget.

“The government should adopt flexibility in the tax rate for interest earned on long-term deposits, corporate tax for banks and financial institutions, and capital gains for institutions that have been merged or acquired,” said Gyanendra Prasad Dhungana, president of the Nepal Bankers Association.

The participants also stressed the need to bring programmes to control the country’s yawning trade deficit. Prudent use of foreign assistance, more focused programmes for Provinces 2, 6 and 7, one-door policy in

taxation, commercialization of farming, processing of herbal products, price controls on essential goods and increase in capital expenditure are among the priority areas that the private sector urged the government to look into while framing the budget.