Interim plan to spend Rs 527 billion

Interim plan to spend Rs 527 billion
eKantipur.com, 7-May-07

The interim three-year plan that the government is implementing from the coming fiscal year has set a target of spending Rs 527.1 billion and achieving an average annual growth rate of 5.5 percent.

According to the proposed Macroeconomic framework being discussed among the planning experts at the National Planning Commission (NPC), the first year of the plan is expected to see a growth of 4.5 percent while the economy, in the remaining two consecutive years, will grow by 5.5 percent and 6.5 percent respectively.

Among the major sectors of the economy, the plan that has set broad based, employment oriented and inclusive economic growth as one of its key strategies, aims to achieve an average growth of 3.3 percent in the agriculture sector, which contributes around 40 percent to the GDP.

Similarly, the government also set a goal of achieving an average growth of 6.93 percent in the non-agriculture sector as against the 4.11 percent set for the Tenth Plan. The annual average inflation rate during the period is expected to remain at 5.6 percent.

Of the total expenditure planned for the period, Rs 295.5 billion has been allocated for the purpose of meeting recurrent expenditures plus serving principal repayments while the remaining Rs 231.6 billion will go for financing capital expenditures, mainly for supporting development activities.

Of the major sources for financing the expenditures, the interim plan is expect to mobilize revenue of Rs 338.5 billion in the period and the GDP-revenue ratio is planned to remain at 14.1 percent. The Tenth Plan has set a target of achieving 14 percent GDP-revenue ratio but the actual achievement, which has not yet been made public, is likely to remain less then target.

Similarly, the plan has a target of mobilizing foreign aid of Rs 153.7 billion during the period to finance both the capital as well as recurrent expenditures. Of the total expected foreign aid, the plan has anticipated Rs 87.4 billion in grants and remaining Rs 66.4 billion in the form of net loans.

A net outstanding deficit of Rs 34.8 billion is expected to be met through domestic borrowing. The planned mobilization of internal borrowing will remain at 1.47 percent of the GDP, higher than the ceiling of less than one percent set by International Monetary Fund for Nepal.