Budget Priorities

In a departure from the past practices, the government has unveiled the principles and priorities of budget for the fiscal year 2024/25 three months before it is presented in the House of Representatives. In the previous years, the principles and priorities were presented barely two weeks before the annual outlay was read out in the parliament. Now the lawmakers will have adequate time to debate and add suggestions to the new budget. Highlighting its key features in the House on Monday, Finance Minister Dr. Prakash Sharan Mahat said it would accord priority to boost public expenditure so that productive sector gets a fillip and more employment opportunities are created. The vision of constitution, election manifestos of the ruling parties and their common minimum programme have guided the Finance Ministry in formulating the budget that is expected to boost private sector confidence and accelerate the post-pandemic economic recovery.

According to Dr. Mahat, the new budget aims to achieve high economic growth and macroeconomic stability that are essential in raising the people’s living standards and environment conducive for increase in commerce, trade and industrial activities. It has laid emphasis on sustainable and inclusive economic growth, public finance balance and allocation efficiency improvement, social sector development and social justice, investment promotion, federalism and good governance promotion and clean energy and development of aviation sector and highways. Nepal holds immense potential in hydropower and agriculture development so budget seeks to invest in these areas that will enable the nation to cut trade deficit and retain the youths who are leaving the country in search of jobs in foreign labour markets.

Similarly, the government is firm on developing tourism, information technology and key infrastructure. For this, it is necessary to exploit the demographic advantages. Nepal has a large number of youth population that must be activated to boost flagging economy. Disaster management, strengthening of financial sector, the rule of law and international cooperation and relations will figure prominently in the budget. The public resources need to be mobilised for the effective service delivery, socio-economic infrastructure development and human capital building. Inordinate delays in the completion of the big projects has raised question about the capacity of agencies involved in their execution. In order to overcome bottlenecks hitting the projects, the government has decided to allocate budget for those projects that have completed the basis of criteria of their classification and preliminary preparations.

In view of poor revenue collection, the government has announced to enforce business and investment-friendly taxation policy. Similarly, it will eliminate the duplication of all types of subsidies and benefits. Arrangements will be made in a way the target groups will get fair access to the state's dole. The production-based subsidy will be implemented to protect and make domestic industries competitive. An investment summit slated for April 2024 is expected to push for necessary policy, legal and institutional reforms to increase domestic and foreign investment. In yet another important step, the process for establishing a chemical fertiliser factory will be started. 

The principles and priorities of the budget are rational but the problems largely lie in their implementation. Effective strategies need to be devised to boost capital spending to build vital infrastructure. There should be coherence between principles, allocation and implementation of the budget. The dedicated agencies should be sent to the field to ensure the effective and judicious allocation of resources. Emphasis should be given to complete old projects instead of adding news ones. Adequate homework and capacity building enables to achieve the stated goals of the budget.