The Himalayan Times, 5 Jan 2018
The government is preparing a budget of Rs 1,570 billion for next fiscal year 2018-19 with an assumption of 30 per cent revenue growth in the coming fiscal.
The Ministry of Finance (MoF) has made the initial estimation of the federal budget 2018-19 to be presented to the Resource Committee meeting led by the vice chairman of the National Planning Commission (NPC).
The incumbent government, as a caretaker government, will not enter into budget formulation works and this process will start only after the formation of a new government with a new electoral mandate.
According to MoF officials, the government has assumed that revenue collection will have a contribution of Rs 950 billion in the next fiscal budget compared to the target of Rs 730 billion of the ongoing fiscal. To achieve this revenue growth target in the next fiscal, the MoF has planned to reduce under invoicing practice, which will help to improve revenue through inland taxes like value added tax (VAT) and income tax, as per Shankar Prasad Adhikari, finance secretary. “The target is quite ambitious, but if we’re able to control under-invoicing, we’ll be able to achieve it.”
Likewise, the MoF plans to raise Rs 153 billion through domestic debt in the next fiscal compared to Rs 145 billion of the current fiscal.
“If the economy grows by six per cent this fiscal, we can easily raise Rs 153 billion through domestic debt, which is an ideal ratio of domestic debt to gross domestic product,” explained finance secretary. Normally, five per cent debt to GDP ratio is considered ideal.
MoF has assumed there will be around Rs 17 billion cash surplus from unspent budget of current fiscal. Apart from this, government will rely on foreign aid – loans, grants and technical assistance – for budget financing, which will hover at around Rs 450 billion.
It seems government’s dependency on foreign aid will rise substantially from next fiscal as the funding needs of local and provincial levels would have to be met and grants would have to be allocated to them accordingly. The government plans to mobilise Rs 286 billion in foreign aid this fiscal.
Government will hand over conditional, equalisation and matching grants to provincial and local governments from next fiscal. The budget of this fiscal had allocated Rs 232 billion – Rs 225 for local bodies and Rs seven billion for provincial level – as provincial assembly is to be formed this fiscal through elections and the grant was for provincial governments to set up of provincial institutions.