Once again political agenda has put the country’s development and economic issues on the back burner.
Instead of a full-fledged budget, Finance Minister Surendra Pandey of the caretaker government on July 13 presented Rs 110.2-billion ‘special budget’ that is meant for the regular government expenditure -- salaries to the government employees, policy and armies, and Constituent Assembly (NASDAQ:CA) members -- only
“Due to ongoing political deadlock, the caretaker government could not present its regular budget for the fiscal year 2010-11,” said Pandey, adding, in the wake of ‘special’ situation, the Special Budget Bill ? that empowers government to withdraw money from Consolidated Fund to carry out regular services and activities in the coming fiscal year under Article 96 (a) of the interim constitution ? has been tabled.
The revised total expenditure of the current fiscal 2009-10 is estimated to remain at Rs 265.63 billion ? 20.93 per cent higher compared to the last fiscal.
The special budget allows the government to make spending ‘not exceeding one-third of the last year’s budget’. “The government has brought in the special budget as a temporary arrangement to allow itself to carry on with its routine expenses and revenue collections in the new financial year, starting from July 17,” said Pandey.
With only a special budget in place, economic policy of the last budget will remain intact until a full-fledged budget is presented by a new government.
Since the Constituent Assembly elections in 2008, it’s second time that the government has failed to come up with a full-fledged budget. Earlier, former finance minister. Ram Sharan Mahat had presented a similar ‘special budget’ in July 2008, two years ago. Dr Baburam Bhattarai brought the budget in September that year unlike the practise of bringing the budget within July 15. Though the budget came on time last year, it took four months to be passed from the parliament hurting the development activities in the countries.
Pandey has not announced any new tax policy as per the interim constitution that bars a caretaker government from enforcing changes in tax structure or introducing new taxes. Entrepreneurs say such ‘temporary arrangements’ by the government will not only mar the development activities but also hurt investors’ sentiments.
“We are in wait and watch mode,” said Federation of Nepalese Chambers of Commerce and Industry President Kush Kumar Joshi. “There won’t be new investments, as investors will wait for the new government’s policy and programmes,” said Joshi, adding, neither will such arrangements address the business fraternity’s problems.
“Once again political agenda has put the economic agenda on the back burner,” said Binod Chaudhary, CA member and President of Confederation of Nepalese Industries. “Economic indicators are nose-diving and expenditures are going up in an uncontrolled manner. Many Acts that could have given fillip to investors’ confidence are gathering dust in parliament.”
Another CA member and industrialist Rajendra Khetan was of the view that neither a full-fledged budget nor such ‘temporary’ arrangement had encouraged development activities. “However, had the budget come on time, it could have addressed rising trade deficit and negative Balance of Payment (BoP),” said Khetan.
Instead of outlining new development programmes and plan, the ‘advance budget’ aims to enable the government function till a full-fledged budget by a new government is tabled.
The next finance minister will have to chalk out a scheme to address several issues like taming inflation, checking intimidation and threat against the business community, creating investor-friendly environment, providing security for the investment and shoring up the plummeting exports to bridge the widening trade gap and BoP position.