Govt to cut use of overseas funds

KATHMANDU, AUG 20:

The government is planning to moderately reduce its dependence on foreign loans and grants to finance its expenses in the next two years, a latest report shows.

While announcing the budget of Rs 517.24 billion for fiscal 2013-14, the government had said it would mobilise around Rs 404 billion through internal sources such as revenues, principal repayment and domestic debt, while foreign grants would contribute Rs 69.54 billion and foreign loans would chip in Rs 43.70 billion to its annual spending.

The amount that the government is planning to raise through internal sources this fiscal is only 78 per cent of the total budget allocated for this fiscal.

But in the next fiscal, the government is planning to meet 80 per cent of its annual expenses through funds raised from various sources inside the country, shows the final draft of Medium Term Expenditure Framework (MTEF) 2013-14 to 2015-16—a document that links policy and plans envisaged by periodic development plans with budgeting. The government is planning to introduce a budget of Rs 571.99 billion in the fiscal 2014-15, the document prepared by the National Planning Commission shows. Of this, Rs 458.10 billion will be mobilised from inside the country, Rs 70.40 billion through foreign grants and Rs 43.49 billion through foreign loans.

But in the fiscal 2015-16, the contribution of revenue, principal repayment and domestic debt to total annual expenses is expected to fall slightly to 79.8 per cent, or 505.75 billion. In that year, the government is planning to introduce a budget of Rs 633.64 billion.

These forecasts on moderate reductions in foreign grants and loans come at a time when many are criticising the government for relying on foreign partners to finance various expenses, especially recurrent expenditure, most of which goes into paying salaries of civil servants and debt servicing.

In the current fiscal year, the government has allocated Rs 353.42 billion for recurrent expenditure, which is over 68 per cent of the annual budget. The government’s recurrent expenditure is expected to further rise to Rs 387.61 billion in the next fiscal. This is around 68 per cent of the total projected budget for that year. In the fiscal 2015-16, the government recurrent expenditure is expected to stand at Rs 415.71 billion—around 66 per cent of budget forecast for that year.

To meet its development targets, the government is also planning to increase its capital spending in the next two years.

The government plans to allocate Rs 93.85 billion for capital expenditure in the next fiscal, which is 10.28 per cent higher than capital budget allocated for this fiscal. In the fiscal 2015-16, the government is planning to raise capital spending to Rs 106.40 billion, which is almost 13.37 per cent higher than the capital budget allotted for fiscal 2014-15.

Despite these hikes, many government officials say the amount would not be enough to meet three-year plan’s growth target of six per cent per annum for which, they say, capital budget of at least Rs 200 billion per year is required.

Source: THT