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Ministries dissatisfied with budget cuts


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2022 May 10, 16:07, Kathmandu
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The government is going to cut general (current) expenditure in the budget of the coming fiscal year 2022/23. For this, the Ministry of Finance has asked all the ministries to be ready for budget cuts. This has led to voices of dissatisfaction within the ministries.

In the discussions between the Ministry and the agencies for the budget of the coming fiscal year 2020/21, the Ministry of Finance has informed that the current expenditure reduction will be given priority. Accordingly, government officials estimate that the cap on most current expenditure headings may be reduced by about 20 percent from the current fiscal year.

The government has already decided to cut government fuel by 20 percent. Stating that the government's foreign exchange reserves were declining, the cabinet meeting on April 13 had decided to cut the fuel for government facilities by 20 percent.

The government had allocated Rs. 1065.29 billion for the current fiscal year. Out of that, Rs. 677.99 billion has been allocated for the federal government under current expenditure programs and titles. The ministry is preparing to cut the current expenditure of the federal government.

Finance has prepared to force the ministries to reduce the current expenditure. Concluding that large sums of money being spent on fuel, spices (stationery) and other miscellaneous items are being spent arbitrarily, the Ministry of Finance is preparing to initiate budget cuts on such titles.

According to a ministry secretary who has already discussed the budget with the finance ministry, the finance ministry has asked to be ready to reduce the current expenditure by 20 percent. "It's not as easy as the finance ministry says, but when the finance ministry says it will reduce it, it has to be managed," he said. "The budget has to be implemented as it comes."

After discussions with the Ministry of Finance, all the Ministries have come to the conclusion that the budget for the coming fiscal year will not increase much. The Ministry of Finance has asked the ministries to pay attention to the implementation of the old program.

"The finance ministry has indicated that the budget could be increased by about 10 per cent over the current financial year, so it would be difficult to start new large-scale projects," he said. However, if the size of the budget does not increase, there is a risk that the expansion of the economy will shrink. 

Some ministries are dissatisfied with the Ministry of Finance preparing for the current budget cuts without detailed discussions with the ministries. There is dissatisfaction in most of the ministries as the budget should be given through discussion based on the growth rate of headline expenditure.

"The budget needs to be realistic, not a plan to cut unnecessary spending," said a joint secretary in the ministry. Money laundering can spread. '

What is the current cost?

The pace of current expenditure and capital expenditure has accelerated year by year. The obligation to take public loan for development work is increasing. With more than 70 percent of the revenue coming from current expenditure, the government is busy with homework of cuts.

The government had spent Rs. 77.12 billion in the fiscal year 2007/08 after the advent of the republic. However, Rs. 39.72 billion was spent in the development budget. The difference was 37 billion. At that time, the ratio of current to capital expenditure was 66:34. Despite rising expectations, the ratio has dropped to 75:25 by the end of last fiscal year.

In fiscal year 2008/09, current expenditure was Rs. 91.44 billion while development expenditure was Rs. 53.51 billion. In FY 2009/10, the government had spent Rs. 127 billion on current expenditure and Rs. 73.08 billion on development expenditure. Even in FY 2010/11, the widening gap between capital and current expenditure did not stop. While the current expenditure was Rs. 151 billion that year, the government was able to spend only Rs. 90.23 billion.

In FY 2011/12, 170 billion was spent while current expenditure exceeded 100 billion for the first time and reached 107 billion. In FY 2012/13, current expenditure of Rs. 243 billion was incurred. However, capital spending has halved this year. Only Rs. 51.39 billion was spent on capital expenditure.

Out of the current expenditure of Rs. 247 billion in FY 2013/14, only Rs. 54.59 billion was spent on development. Even in the fiscal year 2014/15, the development expenditure could not go above Rs. While Rs. 303 billion was spent in the current year, only Rs. 66.69 billion was spent in the development budget.

The same trend continued in FY 2015/16. The government, which spent Rs 339 billion on recurrent expenditure that year, was able to spend only Rs 88.84 billion on development. In FY 2016/17, the development expenditure has once again crossed Rs. The government spent Rs 371 billion that year and spent Rs 123 billion on capital expenditure.

In FY 2017/18, recurrent expenditure reached Rs. 518 billion. The development budget, on the other hand, spent only Rs 208 billion. In FY 2018/19, the current expenditure was Rs. 696 billion while the capital expenditure was Rs. 270 billion. In FY 2011/12, current expenditure of Rs. 716 billion and capital expenditure of Rs. 241 billion has been incurred.

In FY 2020/21, Rs. 786 billion was spent and Rs. 191 billion was spent on capital expenditure. The capital budget was only Rs. 228 billion out of the current expenditure of Rs. 846 billion in FY 2021/22. In the current Fiscal Year 2022/23, only Rs. 117 billion only.

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