Budget likely to reach record Rs 1tThe government budget for the next fiscal year is likely to reach a record Rs1 trillion with the National Planning Commission (NPC), buoyed by swelling revenues and a hoard of unused funds in the government coffers, planning to raise the budget ceiling.
The government budget for the next fiscal year is likely to reach a record Rs1 trillion with the National Planning Commission (NPC), buoyed by swelling revenues and a hoard of unused funds in the government coffers, planning to raise the budget ceiling.
The NPC had fixed the upper limit at Rs909.96 billion for fiscal 2016-17 which begins in mid-July. NPC sources said that the new ceiling would be around Rs1 trillion.
“The exact budget ceiling will be decided by the Resource Committee meeting that is scheduled to be held soon,” they said. “We have Rs100 billion lying idle that could be spent on major infrastructure projects,” said a high-level NPC source who did not wish to be named.
“Besides, revenue collection has increased significantly in the last few months, something that the government had not expected due to the five-month-long trade embargo,” he added.
Also, the government has recently received Rs9.96 billion in capital gains tax from telecom giant Ncell which has boosted its cash reserves.
According to the NPC, the government will accord priority to road construction, education and agriculture in its annual financial plan.
“Various ministries have asked for an increase in their budget allocations, but additional funds will be allocated on a priority basis.”
Learning the lessons from last September’s trade embargo which exposed the country’s vulnerability, the NPC has also given priority to strengthening the supply system by boosting the fuel storage capacity.
The government’s policies and programmes for the next fiscal year has envisaged constructing oil storage tanks to maintain at least a 90-day supply of oil reserves.
The road projects that are in the priority list are Biratnagar-Kimathanka, Mustang-Korala, Karnali corridor connecting Hilsa, Galchhi-Syabrubeshi-Rasuwagadhi and Kathmandu-Tatopani.
NPC officials said that the Ministry of Physical Infrastructure and Transport had sought a budget of Rs79 billion for the next fiscal year against the ceiling of Rs55 billion. “We have considered the ministry’s proposal and it will get a large budget.”
Likewise, the Ministry of Education, which has got the highest budget ceiling of Rs101 billion, has demanded another Rs20 billion.
The Irrigation and Supplies ministries have also asked for an additional Rs15 billion each. NPC sources said Rs123 billion would be allocated for reconstruction in the next budget.
Economist Madan Kumar Dahal said a large budget was usual for a country that had been hit by a deadly quake and crippling trade embargo.
“However, the government needs to build a regulatory framework to control inflation that could result from the enlarged size of the budget,” he said.
Dahal said that the government’s capacity to spend the capital budget should be enhanced. The government’s capital expenditure has reached a mere 20 percent as of the first nine and a half months of the current fiscal year.
However, officials said that capital expenditure had been hitting 60 percent in the last few years. The government will be presenting next year’s budget on May 28.