Demands on budget threaten financial stability: Mahat

Demands on budget threaten financial stability: Mahat
eKantipur.com, 27-Jun-07

Finance Minister Dr Ram Sharan Mahat has said that the process of formulating budget for the upcoming fiscal year has become a daunting task due to unprecedented pressure from all sectors for unjustifiably high budget allocations.

"What we all need to understand is that the government is not in a position to meet all those unmanageable demands, because the economy is not expanding, and government has limited resources," he told the Post.

The finance minister also warned that if the government formulates an expansionary budget by addressing the existing pressures, it would erode Nepal's international credibility thereby affecting future foreign assistance.

"The financial stability that the government has been able to maintain in difficult periods over the years will be at stake should we address all those demands," Dr Mahat said.

Dr Mahat reiterated that the topmost priority of the upcoming budget is to hold elections of constituent assembly and government will earmark necessary budget for that purpose. However, he added that extremely high demand of budget for the poll, which is running at around Rs 8 billion (Rs 2 billion from Election Commission and Rs 6 billion for the Home Ministry for election security) is something unmanageable. "Bringing the demand into a realistic size and allocation required for ongoing projects is a big challenge," Mahat said

He further said that almost all the demands have been placed in ad hoc manner and lack due processing, related to total cost, technical evaluation and viability.

"There are certain procedures that a project should go through to be included in the national budget," Dr Mahat said, adding, "Even if we allocate budget for such projects, it will have to face various problems in their implementation phase."

"The demand for additional budget is high in recurrent expenditure, especially in the consumption sector like raising perks and benefits, and recruiting additional manpower whereas we want to increase budget in the development activities with high returns," said Dr Mahat.

Referring to the demand of government employees to raise their salary, he said that the government is studying a report submitted by the pay commission, inflationary trend and revenue mobilization and the understanding recently reached between the government and representatives of government employees, and a positive conclusion will be reached soon.