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The budget has also given priority to the expansion of quality health service and creating health infrastructure, rehabilitation of the production and supply chain disturbed due to the measures put in to check the spread of the coronavirus, creation of jobs and food security, completion of delayed infrastructure projects, expansion of information technology and strengthening of good governance.
This is first time in the recent history that the country has witnessed a budget that is smaller than the budget of the previous year.
Dr Khatiwada had unveiled the budget of Rs 1.53 trillion for the current fiscal with an aim of completing the reconstruction work and back-log projects, the two targets which couldn’t be achieved.
Next FY’s budget is 3.81 per cent smaller than that of the current fiscal.
Capital budget reduced
Almost two-thirds of the budget, Rs 948.94 billion or 64.4 per cent, is earmarked for the recurrent expenditure. Likewise, Rs 352.91 billion is allocated for capital expenditure and Rs 172.79 billion will go to financial management. The capital and financial management has the share of 23.9 per cent and 11.7 per cent respectively.
The recurrent budget has gone up from 62.4 per cent and capital budget come down from 26.6 per cent.
Likewise, the resources for the expenditures will be managed primarily through the revenue and domestic and foreign loans.
“Rs 889.62 billion will be raised through revenue and Rs 60.52 billion from foreign grant. The remaining deficit of Rs 524.5 billion will be arranged through loans,” Dr Khatiwada said while presenting the budget at the joint session of the Federal Parliament.
The size of foreign and domestic loan will be Rs 299.5 billion and 225 billion respectively.
The Finance Minister has maintained that the budget is a creation that aimed at treating the multiple bruises caused by the coronavirus pandemic.
Infrastructure like railway, bridges and roads, irrigation and hydroelectricity, airports, flyovers and tunnels, programmes like Digital Nepal Framework, urban development, digital education, broadband internet to all and insurance to all are included in the budget which are announced amidst a global health crisis and economic breakdown caused by the execution of lockdown and travel restrictions to save human lives.
Dr Khatiwada also said at the parliament that the national aspirations of leading the country on the path of development and prosperity propelled by two years’ achievement and high economic growth were shattered due to the coronavirus outbreak.
He said that he had felt the responsibility of saving the lives and giving impetus to the economy, which obviously are the contradictory aims given the poor health infrastructure and human resources in the country.
7% growth target
Despite the bleak economic environment, FM Dr Khatiwada has set the GDP growth target of 7 per cent for the coming fiscal year.
His hopes are based on the projects that could be completed within a year and yield immediate economic benefits, expectations that the delayed and sick projects would be expedited, post-quake reconstruction would be completed and the service would be expanded.
“Although it is difficult to gauge the impact of the COVID-19 now, I hope that the economy will catch its rhythm after the situation becomes normal. Therefore, I hope that the country will embark on the path of growth of last three year’s average of 7 per cent,” said Dr Khatiwada.
Inflation target has also gone up to 7 per cent against this year’s 6 per cent.
Budget to local bodies
States and local bodies will get Rs 55.19 billion and Rs 90.5 billion respectively under the equilisation grant and Rs 36.35 billion and Rs 161.8 billion respectively for conditional grant from the federal government.
About Rs.122.14 billon revenue will be distributed to the states and local bodies based on their area, demographic, human development and low-development indicators.
Likewise, Rs 9.96 billion is allocated for the matching grant to fund the projects executed by the sub-national governments. Rs 9.97 is allocated for special grant.
Only 70% budget to be used
Due to the crisis created by the coronavirus, only 70 per cent budget of the current fiscal year is likely to be utilised.
Saying that the pandemic had affected both income and capital expenditure, FM Dr Khatiwada has revised the budget of the current fiscal which puts the actual budget at Rs 1073.35 billion.
Of the total allocation, recurrent expenditure will be 73.3 per cent and capital expenditure will touch 58.6 per cent.
Similarly, revenue mobilisation will be 74.4 per cent, Rs 827 billion of the target of Rs 981.13 billion, foreign grant will be reduced to Rs 32 billion from Rs 58 billion, foreign loans to Rs 121 billion from Rs 298.83 billion and domestic borrowing will be Rs 193 billion against Rs 195 billion target.