Pandey presents Special Budget

Once again the political agenda has pushed the development and economic agenda to the back burner. Instead of the full fledged budget, finance minister of the caretaker government Surendra Pandey today presented Rs 110.21 billion 'special budget' meant only for the government expenditure.
"Due to the present political deadlock, the caretaker government could not present the regular budget for the fiscal year 2010-11," he said adding that "due to the emergence of special situation, the Special Budget Bill -- that empowers government to withdraw money from Consolidated Fund to carry out regular services and activities in the coming fiscal year under the Article 96 (a) of the Interim Constitution -- has been presented.
According to him, the revised total expenditure of this fiscal year 2009-10 is estimated to remainat Rs 265.63 billion -- 20.93 per cent higher compared with a fiscal year ago. The 'special budget' will help the government to spend 'not exceeding one-third of the last year's budget'. "The government is forced to bring the 'special budget' as a temporary arrangement to allow itself to carry on with routine expenses and revenue collections in the new financial year, starting from July 17," he said.
Economic policies of the last budget gets continuity until a full-fledged budget is brought by the new government.
It is the second time after the Constituent Assembly (CA) election that the government has failed to present a full-fledged budget on time and made temporary arrangements. Under the Interim Constitution, Pandey has not announced any new tax policies as a caretaker government cannot bring changes to the present tax structure or introduce new taxes. Earlier, former finance minister Dr Ram Sharan Mahat had brought such 'special budget' in July 2008. But the entrepreneurs think that such 'temporary arrangements' will hurt the development activities and investors' sentiments. "We are on 'wait and watch' mood," said president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Kush Kumar Joshi. "There will be no new investment as the investors will wait for the new government's programme and policy," he said adding that such arrangements will also not address the business fraternities' problems. Binod Chaudhary, CA member and the president of Confederation of Nepalese Industries (CNI) agreed, "Once again the political agenda has pushed the economic agenda to the back burner." "At a time when all the economic indicators are nosediving, expenditures are going up in an uncontrolled manner hurting the economy," he said adding that many Acts that could boost the investors' confidence are gathering dust in the Parliament. Another CA member and industrialist Rajendra Khetan thinks that neither had the full-fledged budget nor this arrangement could propel development activities. "However, had the budget come on time, it could have addressed rising trade deficit and negative Balance of Payment (BoP) position," he said adding that the arrangement is only for the government expenses. Instead of outlining new development programmes and plans, the 'advance budget' aims to enable the government function till the full-fledged budget is brought by the new government to be formed.

The next finance minister will have a daunting task to tame inflation; check intimidation and threat against business community, create investor-friendly environment, provide security for the investment, and push the plummeting exports up to bridge the widening trade gap and BoP position.