Government seeks alternatives for financial crisis amid resource mismanagement

KATHMANDU: The government is facing a pressing financial challenge due to mismanagement of resources and failure to meet its obligations in the past fiscal year. As a result, it is certain that a resource crisis will hit the government in the current fiscal year.

Struggling to secure resources for fulfilling its payment obligations, the government has begun exploring alternative avenues. Despite efforts to boost revenue collection, it appears unlikely that the targets will be met, and even if they are, the full extent of responsibilities may not be covered.

Finance Minister, Prakasharan Mahat, has taken the initiative to address the ongoing public finance resource crisis. His strategy involves a focus on both tax and non-tax revenue collection and an increase in administrative activities. However, solely relying on administrative measures seems inadequate to achieve the desired revenue targets.

An official commented that the Finance Minister considers these efforts as a last-ditch attempt to tackle the financial predicament.

The Minister is also placing importance on enhancing existing resources and improving resource management systems. Apart from revenue concerns, there have been challenges in the mobilization of foreign loans and grants, despite the availability of more than $10 billion in such resources, which have already been agreed upon or committed.

To ensure successful project implementation, the government needs to strengthen its capacity for project execution and construction. Mere resource management without expanding implementation capabilities might not yield the desired results.

In light of these challenges, FM Mahat stresses the importance of vigilant project implementation to maximize resource utilization. Relying solely on revenue and internal debt to meet increasing obligations seems less feasible. Instead, the government should prioritize the mobilization of foreign resources.

Obstacles posed by donor agencies’ stringent conditions have been cited by government officials as hindrances to accessing foreign resources.

The current system’s procedural hassles make quick spending challenging. The Minister of Finance suggests exploring diplomatic and political initiatives to address bottlenecks in the process and conditions related to foreign loans and subsidies.

Considering concerns over high-interest rates, the government is exploring options like low-interest foreign loans, including those from organizations like the Chinese-led AIIB. However, obtaining high-interest foreign loans remains a difficult proposition.