Kathmandu. As mandatory obligations such as interest payments on public debt and social security expenditures continue to increase, but the government’s revenue target is not being met, most thematic ministries are likely to receive a lower budget for the upcoming fiscal year (FY) than for the current fiscal year (FY).
The National Resources Estimates Committee has set a budget ceiling of Rs 1965 billion for the upcoming fiscal year 2082/83. The government will have to bring a budget within this limit. Although the budget ceiling for the upcoming fiscal year is slightly higher than the actual allocation of Rs 1860 billion.30 billion for the current fiscal year, the ministries with higher development expenditures will receive a lower budget as mandatory obligations increase. It is seen that the budgets of ministries with higher capital expenditures, including energy, water resources and irrigation, physical infrastructure and transport, urban development, agriculture and livestock development, are likely to be cut.
When setting the budget ceiling of Rs 1965 crore for the upcoming fiscal year, it is estimated that only Rs 1263.10 billion will be received from internal revenue. This shows that if the budget is brought according to the ceiling given by the Resource Estimates Committee, Rs 637.55 billion will be insufficient resources. When estimating the resources, there is not much difference between the internal revenue target for the current fiscal year and the estimate for the upcoming fiscal year. The government estimates that it will increase by about 10 percent compared to the revenue target set through the mid-term review.
410 billion required to pay principal and interest on debt
The government had allocated Rs. 422.85 billion this year to pay the principal and interest on public debt, but the committee has stated that more than Rs. 410 billion will be required to pay the government debt in the coming fiscal year. It is estimated that Rs. 343.55 billion will be required to pay the principal and interest on internal debt in the coming fiscal year.
The government had allocated Rs. 336.95 billion to pay such debt in the current fiscal year. Similarly, it is estimated that Rs 67 billion 189.8 million will be required in the coming fiscal year to pay the principal and interest on external debt. Of this, Rs 49 billion 61.27 million is estimated to be required for the principal and interest on multilateral foreign debt and Rs 17 billion 57.71 million for bilateral foreign debt. For the current fiscal year, the government had allocated Rs 65 billion 89.82 million to pay the external debt.
The practice of keeping a large amount in the miscellaneous heading of finance, i.e., appropriations, has been criticized in the parliament in previous years. For the current fiscal year, the government had introduced the budget by keeping Rs 75 billion 950 million in appropriations, but the Resources Estimates Committee has fixed a ceiling for the coming fiscal year so that a budget of Rs 102 billion 278.8 million can be kept in the miscellaneous heading of finance.
The budget for the financial transfer from the federal government to the provincial and local levels for the upcoming fiscal year has been set at a ceiling that may increase slightly. For the current fiscal year, the government had allocated Rs 408.87 billion for financial transfer. For the upcoming fiscal year, its limit has been set at Rs 401.39 billion. Of which, the provincial government has been set at Rs 97.51 billion and the local government at Rs 301.58 billion.
How much ceiling for which ministry?
The Office of the Prime Minister and Council of Ministers has received a budget ceiling of Rs 6.15 billion and 7.2 billion for the upcoming fiscal year. Of which, it has been asked to bring a budget within the limit of Rs 5.44 billion 65 million for the current heading and Rs 710 million 700 million for the capital heading. The Prime Minister’s Office had received a budget of Rs 5.59 billion 17 million for the current fiscal year.
The Ministry of Industry, Commerce and Supplies has received a ceiling of Rs 8.25 billion 15 million. This ministry had brought a budget of Rs 9.28 billion 22 million for the current fiscal year. On this basis, the budget ceiling for the coming fiscal year is lower than the budget received by the Ministry of Industry for the current fiscal year.
Similarly, the Ministry of Energy, Water Resources and Irrigation, which received a budget of Rs 87.55 billion 99 million for the current fiscal year, has received a ceiling of only Rs 50.79 billion 91 million for the coming fiscal year. This is the budget ceiling excluding national pride projects under the ministry. However, the Ministry of Energy is also likely to receive a lower budget for the coming fiscal year than the budget it received for the current fiscal year.
The budget of the Ministry of Agriculture and Livestock Development is also expected to decrease. This ministry, which brought a budget of Rs 57.29 billion for the current fiscal year, has received a budget ceiling of only Rs 50.75 billion 7.8 million for the coming fiscal year.
Similarly, the budget ceiling of the Ministry of Water Supply has been set at Rs 20.75 billion 13 million. This ministry had brought a budget of Rs 26.63 billion 4.7 million for the current fiscal year. Compared to this year, the Ministry of Water Supply is also likely to receive a smaller budget in the coming fiscal year.
The Ministry of Home Affairs, which received a budget of Rs 199.243.4 million for the current fiscal year, has received a ceiling of Rs 203.915 billion for the upcoming fiscal year. Of the ceiling received by this ministry, Rs 192.244 billion has been allocated for current headings and Rs 11.67 billion for capital headings.
The budget of the Ministry of Culture, Tourism and Civil Aviation is also expected to decrease. This ministry, which received a budget of Rs 11.911 billion for the current fiscal year, has received a ceiling of only Rs 5.999.6 billion for the upcoming fiscal year.
The size of the budget of the Ministry of Foreign Affairs is expected to increase. This ministry received a budget of Rs 6.77 billion 42 million for the current fiscal year, while a budget ceiling of Rs 7.36 billion 76 million has been set for the upcoming fiscal year. The budget of the Ministry of Forest and Environment is expected to decrease. This ministry has received a ceiling of Rs 12.31 billion 61 million for the upcoming fiscal year. The budget of the Ministry of Forests for the current fiscal year was Rs 15.70 billion 91 million.
Similarly, the Ministry of Land Management, Cooperatives and Poverty Alleviation has brought a budget of Rs 6.82 billion 62 million for the current fiscal year, while a ceiling of Rs 6.91 billion 99 million has been set for the upcoming fiscal year.
The ceiling for the upcoming fiscal year is lower than the budget received by the Ministry of Physical Infrastructure and Transport for the current fiscal year. This ministry had received a budget of Rs 150 billion 532 million for the current fiscal year, but for the upcoming fiscal year, it has received a ceiling of Rs 144 billion 751 million.
The Ministry of Women, Children and Senior Citizens has received a ceiling of Rs 1622 million for the upcoming fiscal year. The Ministry of Youth and Sports, which brought a budget of Rs 3.5 billion 4.8 billion for the current fiscal year, has received a ceiling of Rs 3.71 billion 2.72 billion for the upcoming fiscal year. The budget of the Ministry of Defense is also expected to increase. The Ministry, which brought a budget of Rs 59.87 billion 1.4 billion for the current fiscal year, has received a ceiling of Rs 60.56 billion 2.8 billion for the upcoming fiscal year.
The budget of the Ministry of Urban Development is expected to decrease. The Ministry, which brought a budget of Rs 92.63 billion 5.4 billion for the current fiscal year, has received a ceiling of Rs 51.89 billion 2.2 billion for the upcoming fiscal year.
The Ministry of Education, Science and Technology, which brought a budget of Rs 23.662 billion for the current fiscal year, has received a ceiling of only Rs 58.281 billion for the upcoming fiscal year.
Similarly, the Ministry of Communications and Information Technology has received a ceiling of Rs 7.528 billion. The ministry had brought a budget of Rs 7.352 billion for the current fiscal year.
The Ministry of Federal Affairs and General Administration brought a budget of Rs 9.171 billion for the current fiscal year, but has received a ceiling of Rs 6.513 billion for the upcoming fiscal year. Similarly, the budget of the Ministry of Health and Population is also expected to decrease. The Ministry, which received a budget of Rs 86.23 billion 89 million for the current fiscal year, has been allocated a ceiling of Rs 47.37 billion 98 million for the upcoming fiscal year.
Similarly, the Ministry of Labor, Employment and Social Security has been allocated a ceiling of Rs 1.38 billion 58 million. This ministry has brought a budget of Rs 8.99 billion 97 million for the current fiscal year.
The Ministry of Law, Justice and Parliamentary Affairs, which brought a budget of Rs 545.3 million for the current fiscal year, has received a budget limit of Rs 557.3 million for the upcoming fiscal year. The Ministry of Finance has received a ceiling of Rs 43.37 billion 42 million for the upcoming fiscal year. This is much less than the budget the ministry received for the previous fiscal year. However, considering the resource estimates made under the heading of miscellaneous finance, the budget for financial management and the resource estimates for the Millennium Challenge Account Nepal Development Committee (MCA-Nepal), the budget for the current fiscal year has been prepared at an approximate ceiling.
Resource estimates to bring in a deficit budget of 6.5 trillion
The National Resource Estimates Committee has determined the resource limit (ceiling) to bring in a deficit budget of approximately 6.5 trillion for the upcoming fiscal year 2082-83.
While determining the budget ceiling of Rs. 19.65 trillion for the upcoming fiscal year, it is estimated that only Rs. 12.63 trillion. 100 million will be received from internal revenue. If the budget is brought according to the set ceiling, there will be a resource shortfall of Rs 637.55 billion. This shortfall will be met through internal and external loans and grants. The annual increase in public debt as a proportion of the country’s gross domestic product (GDP), the large amount spent on debt principal and interest payments, and the amount borrowed going to current activities rather than capital formation are seen as challenges. If the budget is brought according to the limit determined by the Resource Estimates Committee and is spent accordingly, it is seen that the country will have to pay about Rs 600 billion in debt in the coming fiscal year alone.
Every year, a situation arises where debt is shown as a source to bring a large budget but domestic revenue cannot increase. If we look at the government revenue growth estimate for the coming fiscal year, it is around the initial target set in the current fiscal year’s budget. However, the committee has estimated that domestic revenue receipt will increase by 10.3 percent compared to the revised estimate for the current fiscal year. The government had set a target of raising domestic revenue of Rs 1.26 trillion 30 billion through the current fiscal year budget, but the revenue target has been reduced to Rs 1.14 trillion 26 billion through the mid-term review of the budget.
It seems that if the limit is set to bring in a budget of around Rs 1.9 trillion for the coming fiscal year, resources equivalent to around Rs 6.5 trillion will be insufficient. This amount will have to be met by raising foreign loans and grants and domestic loans. The committee has estimated that foreign aid will increase by 28.8 percent in the coming fiscal year compared to the current fiscal year. It is estimated that foreign grants of Rs 45 billion and foreign loans of Rs 235 billion 90 million will be received in the coming fiscal year, while the government had also revised the target for receiving foreign loans and grants through the mid-term review of the current fiscal year budget. The government’s target for the current fiscal year was Rs 217.67 billion to borrow foreign loans, but it was reduced to Rs 180.84 billion through the mid-term review in January. Similarly, the government’s target for the current fiscal year was Rs 52.33 billion in foreign grants, but it was reduced to Rs 36.63 billion through the budget review.
Similarly, while showing the sources to meet the deficit budget for the upcoming fiscal year, the size of the internal debt has also been increased from the current fiscal year. The government has set a target for the current fiscal year to borrow Rs 330 billion in internal debt. For the upcoming fiscal year 2082-83, it is estimated that Rs. 357.46 billion can be met by raising internal loans. RSS
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