With the Fiscal Year 2069/70 approaching, the government has begun preparing budget for the next year. After handing over of the People’s Liberation Army (PLA) under the government’s control and narrowing down most of the contentious issues of the new constitution, everyone is eying the government’s move to expedite economic growth in the country. The people have anticipated new and revolutionary economic reform programmes and policies. As assured by the Prime Minister, ministers and senior government officials, the government would focus on economic prosperity with the completion of peace and constitution drafting processes. The economic prosperity is essential to address all the issues and aspirations raised by the various movements and to institutionalize the achievements of those movements.
In this backdrop, Yogesh Pokharel of The Rising Nepal caught up with Secretary at the Ministry of Finance Krishna Hari Baskota to talk about the preparations for the next fiscal budget and its major programmes and policies. Excerpts:
Preparations for the next fiscal budget are underway. What will be the major attractions of the new budget?
Yes, we are busy making preparations for the next fiscal budget. We are rigorously working on it. A committee under the coordination of the National Planning Commission (NPC) Vice-Chairman has been formed to fix the ceiling and identify the sources of the next budget.
The budget would focus on peace, constitution, good governance and economic prosperity. We have set some basis for selecting programmes and policies to be unveiled in the next budget. So, we will choose such programmes and policies that help economic development, employment generation and inclusive development. Discussions to unveil some remarkable programmes and policies are underway. However, the programmes and policies are yet to get a concrete shape until now.
What is the ceiling of the next budget and how will the budget be mobilized?
The NPC has fixed the ceiling of the next fiscal budget at Rs. 429 billion budget. Out of which, we have set to manage Rs. 274 billion from revenue, Rs. 85 billion from foreign grant, Rs. 32 billion from foreign loan and Rs. 38 billion from domestic borrowings.
What are the major priority sectors of the next budget?
The budget aims at attaining a double-digit economic growth. There are very limited potential sectors of investment that could help propel the rapid economic development in the country. The agriculture, hydropower, tourism and infrastructure development are some of them. So, the budget would focus on bringing in more and more programmes and policies to harness the benefits of those potential sectors.
With almost completion of the peace and constitution writing processes, the time has come to focus on institutionalizing the achievements gained so far with the radical economic development. How will the budget propel the country’s development process?
With the completion of peace and constitution drafting processes, the government will focus on economic development. So, the next fiscal budget should focus on stabilization of external sector, achieving economic growth, reducing inflation and maintaining the fiscal stability. For this, there are some fundamental sectors that the budget should focus on. The first priority is to give dynamism to the national economy. It means that the politics have to be become the centre of everything. Now, we should give top priority to economy putting it on the centre. Though the economy is the centre of everything, we have yet to accord due priority to this sector. Similarly, promoting the export trade and investment is another sector. Last year, around 209 foreign companies brought in around Rs. 10 billion investments to the country. However, we have not been successful in luring big companies to Nepal. Mobilization of foreign aid is another vital issue.
Last year, Nepal had imported goods and services worth Rs. 395 billion. However, the export trade was merely of around Rs. 65 billion. Therefore, the country had to face a trade deficit of around Rs. 330 billion. This year too, up to the end of first eight months, we have already imported goods and services amounting around Rs. 295 billion, while the export is only of around Rs. 49 billion. We have already faced a trade deficit of around Rs. 247 billion. So, the budget should focus on increasing exports and substituting imports.
The Government of Nepal has declared the fiscal year 2012/13 as the Nepal Investment Year with an aim of attracting a lot of Foreign Direct Investment to the country. Will the government introduce any programme in the budget to support the national investment campaign?
We have a challenge of creating a more conducive climate for investment. We have already announced several measures to promote and protect investments in the country in our previous programmes and policies, too. However, the government alone could not do anything. Politics play a major role in creating a congenial investment environment. Unless the major political parties make a single voice on their economic policy, it will be impossible to attract more investments to the country. Similarly, the local people also should play a cooperative role in bringing in investments.
This upcoming budget will have surely some sort of programmes to promote investments targeting the investment year. The budget will focus on addressing existing problems of power, infrastructure, road, sewage, raw material, skill labour and market, to some extent.
We have often failed in prioritizing our programmes and allocating the budget accordingly. The budget gets scattered in the four winds due to the pressure and influence of political leaders.
Yes, it may be due to the ongoing political transition. However, we have already set up some system to choose programmes and policies for the fiscal budget and it will come into the system in due course. We have large projects, which get top priority in every fiscal budget. These projects account more than 70 per cent of the capital budget. It is natural to allocate few programmes and a small chunk of budget as per the political pressure and influence.
There are comments that the government budget is allocated not as per the priority of the programme but according to the power and influence of the leaders. What is your take on this?
I do not agree with this statement. We have developed our own system to devise programmes and policies of the fiscal budget. The government allocates its budget as per the priority of the programmes that come through its channel.
The government has been facing problems in increasing its capital expenditures. What do you think is the major problem?
There are various reasons behind this. They include the ongoing political transition, selection of projects and programmes without prior studies, lack of reward and punishment system for the executors, unit costing, among others. There is a system that once the budget is allocated, only then the programmes or projects get momentum. They start with survey, preparing project detail and estimation only after the allocation of the budget, which surely delays the execution of the project. Therefore, we have felt a dire need for a project bank. Every ministry should prepare their own project bank. Therefore, it will be easier for the government to select the project while allocating budget. This hitch will eventually help execute the project on time, too. Besides, there is some problem due to non-cooperation from trade unions, local people, among others.
Do not you think we should go for revamping the existing planning process?
It takes time to come everything into a system. It will be corrected within few years. The first and foremost thing is political willpower. Either there should be a majority government or the major parties should come together in their economic agendas at lest for next 10 years. That will certainly help bring things to the system. The system should be made more effective. The monitoring and evaluation system should be made more effective.