By Our Reporter
The government is all set to announce a new budget replacing the one brought through an ordinance by the previous government led by KP Sharma Oli.
Presenting a white paper on the current status of the economy at the Federal Parliament on Tuesday, Finance Minister Janardan Sharma said, “The new budget will be in line with the Common Minimum Programme (CMP) of the ruling alliance, policy and priority of the present government, public interest and challenges created by the COVID-19 pandemic.”
The economy battered by the global COVID-19 pandemic bears a gloomy face with bleak prospects of meeting the growth targets estimated in the budget of the last fiscal year 2020/21, said Minister Sharma.
Poor and failure to timely budget execution had resulted in negative growth of 2.1 per cent against the target of 8.5 per cent in the FY 2019/20 while the second wave of the pandemic inflicted serious injuries to the economy as the business and industries struggled to combat the untoward situation amidst looming uncertainty of the coronavirus.
FM Sharma said that the 7 per cent economic growth estimates for the FY 2020/21 would not be achieved due to the impact of the pandemic. The previous government had already lowered the growth target to 4 per cent and said that even the adjusted aim was difficult to meet.
According to the paper, there is a risk of inflation due to the expansion in the economic activities and price hikes of petroleum products in the international markets.
Gross domestic saving is gradually going down – it was 13 per cent four years ago but is estimated to fall to 6.6 per cent last year. Likewise, capital formation is also reduced from 30.6 per cent four years ago to 27.3 per cent in the last fiscal.
Another troubling fact is the increasing government recurrent expenditure and reduced size of the development budget.
The white paper noted that employment and economic activities did not increase in line with the expansion of loans from banks and financial institutions. Similarly, a large part of the loan is limited to a few individuals of selected locations and common people have poor access to finance.
In the last five years, government debt is increased to Rs. 1729 billion from Rs. 698 billion – a huge jump from 22.7 per cent of the Gross Domestic Product of the country to 40.5 per cent. However, there were no significant achievements made from the debt obtained.
According to the paper, there was a need for policy reforms to attract more Foreign Direct Investment and attract manufacturing industries to the capital market.
The government has mentioned that the relief and rehabilitation programmes for COVID-19 affected businesses and people were insufficient.
The White Paper has emphasised domestic employment opportunities by utilising the demographic benefits for the economic development of Nepal by gradually reducing high dependence on foreign employment.
Meanwhile, the government has introduced various relief programmes through the budget and monetary policy with a motive to minimise the COVID-19 pandemic’s impact on various economic arenas.
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