While officials at the Ministry of Finance (MoF) are busy formulating the next fiscal year federal budget, the finance minister is absent in this process. Due to the changes in the government, the post of finance minister has remained vacant for the past one month. The Finance Ministry was left without proper leadership after Bishnu Paudel resigned as finance minister on February 28.
The ruling alliance is taking a long time to agree on the ministerial portfolio due to disagreements over power-sharing. Since then, Prime Minister Pushpa Kamal Dahal has been holding the Ministry of Finance. The MoF officials say they are facing difficulty in the process of budget formulation due to the absence of a finance minister.
As the end of the fiscal year is approaching, the MoF has given priority to the preparation of the budget for the next fiscal year 2022/23. The constitution of Nepal requires the government to bring the budget on May 15 before the fiscal year starts on July 17.
MoF has formed nine sub-committees for the formulation of necessary revenue policies that will be included in the budget. A senior official of the ministry said that the work related to the writing of the budget has intensified based on the suggestions received through the sub-committees.
A sub-committee formed under the coordination of Dirgharaj Mainali, Director General of the Inland Revenue Department, is working to formulate policies on inland revenue. A sub-committee has been formed under the coordination of Chakra Bahadur Budha, Director General of the Department of Customs to formulate a policy on customs revenue. Similarly, a sub-committee formed under the coordination of Baburam Gautam, Joint Secretary of the Ministry of Industry, Commerce, and Supplies, is working for formulating revenue policy related to industry, trade, and investment.
Likewise, a sub-committee under the coordination of Rajendra Poudel, Joint Secretary of the National Planning Commission (NPC), is working to formulate policies on agriculture, energy, and tourism revenue. Also, a sub-committee has been formed under the coordination of Jhak Prasad Acharya, Joint Secretary of MoF, to take suggestions from the stakeholders about the revenue policy of banks and financial institutions, insurance, cooperatives, and capital market.
Meanwhile, a sub-committee formed under the coordination of Anand Kafle, Joint Secretary of MoF, is working to take suggestions on non-tax revenue policies of the government. In addition, a sub-committee has been formed under the coordination of Ishwari Prasad Aryal, Joint Secretary of MoF, for formulating policies related to intergovernmental revenue. Also, a sub-committee has been formed under the coordination of Arjun Khadka, Joint Secretary of MoF, to improve the laws related to revenue.
According to the ministry officials, the revenue policy will be formulated based on the suggestions received through the sub-committees that are currently working on collecting suggestions from stakeholders.
The Revenue Advisory Development Committee, which earlier used to be tasked with the formulation of revenue policies and programs, has been replaced with the Revenue Advisory Committee established under the chairmanship of the Revenue Secretary. Issuing a public notice, MoF has called for suggestions related to revenue policy to be submitted by April 3.
According to the ministry sources, the budget is being prepared within the ceiling of Rs 1688 billion set by NPC for the next fiscal year. The ceiling is Rs 105.43 billion less than that of the current fiscal year. The government had earlier brought the budget of Rs 1793 billion for the current fiscal year which was trimmed by Rs 244 billion to Rs 1599 billion through the mid-term review of the budget.
NPC reduced the size of the budget ceiling analyzing the contraction in government revenue, the decreasing trend of foreign grants, the possibility of pressure on loan and interest payments to international lenders due to volatility in the foreign exchange rates, and the growing burden of internal debt payments. MoF officials say that the budget for the upcoming fiscal year is being prepared considering these factors.
NPC has estimated that a total of Rs 1430 billion will be collected in revenue in the next fiscal year. Similarly, the commission estimates that Rs 201 billion will be raised from foreign aid (loans and grants) and Rs 230 billion from internal loans.