Budget size likely to shrink in Lumbini Province

By Diwakar Pokharel,Deukhuri, May 10: The Lumbini Province government is likely to present a smaller budget for the next fiscal year compared to the budget of the current fiscal year thanks to reduction in revenue collection.

After the provincial government failed to collect the targeted revenue of Rs. 6.73 billion in the current fiscal year, it is mulling to cut the size of the budget by 30 per cent for the next fiscal. 

It is now certain that the budget size will shrink, as the provincial government has to prepare its new budget for the upcoming fiscal year from the budget allocated by the federal government. 

The Ministry of Economic Affairs and Planning of the province has already sent the budget ceiling to the ministries based on the new estimates.

The pre-budget discussions in the province have concluded. Deputy Secretary and Spokesperson for the Ministry, Surendra Pandey, announced that in the next phase, they would engage in deliberations on the principles and priorities of the budget.

He informed that they instructed the ministries to request 75 per cent budget of the capital expenditure and 70 per cent of the recurrent expenditure of the current fiscal year for the next year.

He said, “We have forwarded the budget ceiling, engaging in pre-budget discussions with the ministries. However, considering the anticipated reduction in the budget allocation from the centre and the scant resources of the provinces, it’s inevitable that the budget will shrink compared to the current fiscal year.”

Pandey mentioned that he had reduced the budget and incorporated it into the principles and priorities of the forthcoming budget. 

The Revenue Consultative Committee has advised the provincial government to align the budget preparation accordingly, emphasising that the revenue from vehicle tax and real estate fell short of expectations.

As the budget shrinks, adjustments have been made to advance the ceiling accordingly.

The Lumbini provincial government had proposed a budget of Rs. 40.47 billion for the current financial year 2024/25. 

Of this, Rs. 13.63 billion was allocated for recurrent expenditure and Rs. 23. 27 billion for capital expenditure.

Likewise, it was projected to be Rs. 3.58 billion or 8.87 per cent for financial transfers. However, under the financial transfer, only 74 per cent of the funds originated from the federal government, as per the sources in the Ministry of Economic Affairs.

The implementation of the budget for the current fiscal year has also been observed to be weak. Only 34 per cent of the budget has been spent in the first nine months of the current fiscal year.

According to the Lumbini Province Controller of Accounts Office, the provincial government has utilised 34.30 per cent of the budget in nine months of the current fiscal year, up to mid-April.

A total of 32.98 per cent of the capital budget and 36.9 per cent of the current budget have been spent. 

Additionally, the Ministry of Finance in Lumbini Province has operated beyond the designated deadline for budget preparation, as per the directives.

According to the directive, the subject plan and budget should be presented by April 23, and the final version of the budget estimates must be submitted by April 28.

However, when the government changed, the tasks could not be completed within the deadline. 

The confusion caused by the change in government hindered the timely preparation of the province’s budget.