Nepal shifts budgetary priorities, allocates funds solely to well-prepared projects in strategic fiscal move

KATHMANDU: The Nepalese government has outlined a strategic shift in its budget priorities, announcing that upcoming funds will be allocated exclusively to projects that have completed thorough preparatory work.

Finance Minister Prakash Sharan Mahat presented the Principles and Priorities of the Appropriation Bill for the fiscal year 2024-25, emphasizing that public borrowing would be prioritized without hampering private sector investments.

The Finance Minister underscored the importance of ensuring financial resources for ongoing projects before initiating new ones.

Acknowledging the widespread criticism of the government’s poor capital expenditure, largely attributed to allocating funds to projects with inadequate preparations, Mahat pledged to exclude such ventures from the upcoming fiscal year’s priority list.

Financial Comptroller General Office records indicate that only around 21 percent of the funds designated for development projects were spent in the first seven months of the current fiscal year.

Despite the commitment to prioritize well-prepared projects, analysts express skepticism about the government’s ability to implement this strategy.

Political pressures and last-minute budget adjustments have historically compromised the efficacy of such commitments. Projects are often included in the budget without a clear funding source, leading to inefficiencies and delays.

Minister Mahat outlined key sectors receiving priority in the upcoming budget, focusing on promoting domestic and foreign investment in areas such as hydropower, solar energy, and other renewable sources.

Additionally, storage infrastructure for agricultural products, subsidies for local productions to enhance competitiveness, and efforts to position Nepal as an attractive tourist destination will be adequately funded. The government aims to support initiatives related to import substitution, export promotion, energy, agriculture, tourism, and information technology.

The appropriation bill, a legislative document granting legal approval for government spending during a fiscal year, serves as the framework for allocating funds to various government activities and programs.

This announcement marks a significant departure from previous budgetary practices, with the government presenting the appropriation bill three months ahead of the traditional budget announcement date. The revised calendar aims to enhance transparency and efficiency in the budgetary process.