Finance Minister Barshaman Pun to present annual budget for fiscal year 2024-25 today

KATHMANDU: Finance Minister Barshaman Pun is set to present the annual budget for the fiscal year 2024-25 before a joint session of parliament today. Despite facing mounting pressure from inadequate revenue collection, the government is expected to announce a budget of approximately Rs 2 trillion for the upcoming fiscal year.

An official from the Ministry of Finance (MoF) indicated that the budget size might increase by around Rs 150 billion, despite various stakeholders advising the government to reduce expenditure.

Historically, successive governments have unveiled inflated budgets with ambitious programs, only to downsize them during the mid-term review due to spending inefficiencies.

For the current fiscal year, the government initially proposed a budget of Rs 1.751 trillion. However, citing insufficient financial resources, the budget was later reduced by 12.62 percent to Rs 1.530 trillion during the mid-term review.

The National Resource Estimates Committee (NREC) under the National Planning Commission (NPC) has set a budget ceiling of Rs 1.8 trillion for the next fiscal year. According to the law, the NREC must establish the budget ceiling by mid-February each year, and the government is required to adhere to this limit.

However, under pressure from Prime Minister Pushpa Kamal Dahal, the government has found ways to exploit loopholes in the law to raise the budget limit. Sources reveal that the NREC has increased the allowable internal loan assumption by the government from 4.5 percent to 5.5 percent of the country’s GDP to facilitate the higher budget threshold.

This year, the government faces significant pressure to address numerous economic challenges through the budget. There is a need for systemic reforms to improve capital expenditure and a growing demand for a revised tax system to boost public revenue.

Chandra Dhakal, president of the Federation of Nepalese Chambers of Commerce and Industry, emphasized the necessity for measures that boost the confidence of private businesses amid the ongoing economic slowdown. “The government has to focus on promoting a business-friendly environment while lifting up the aggregate demand and aggregate supply situation of the economy,” Dhakal said.

When allocating funds, the government is urged to consider only projects that have completed the necessary preparations.

Last November, the Commission for the Investigation of Abuse of Authority (CIAA) recommended that federal, provincial, and local governments include only financially, technically, and environmentally viable projects in the ‘project bank’ when formulating the budget.

The presentation of the budget comes at a critical time as the government attempts to navigate through economic hurdles and ensure sustainable growth. All eyes will be on Finance Minister Pun as he outlines the fiscal priorities and strategies for the year ahead.