Government is preparing to bring transformational budget: Finance Minister Pun

Kathmandu: Finance Minister Barsha Man Pun has said that rather than strict policies, reformative and transformative plans and programmes would be brought in the upcoming fiscal year’s the budget.

Addressing the pre-budget discussion programme organized by The Society of Economic Journalists- Nepal (SEJON) here today, Finance Minister Pun said the government shall lift up the presently sagging confidence of the private sector and adopt reformative and transformative policies in some sectors to remove the sluggishness seen in the economy at present.

‘The economy is sluggish, but we are on the improvement course and are hopeful that it will improve. We give priority to boosting the morale of the private sector. To raise the morale of the private sector, there is facilitation from the government,’ he said, adding that there have been suggestions that interventionist policies should be adopted in order to improve, but the government will not go to extremes, ‘Some areas are in need of transformation and not just reform.’

According to the Finance Minister, the government is committed to protecting the investment, trade and business, and property of the private sector. He also claimed that the government’s policies would be made uniform and harmonized.

‘The government is committed to synchronization between the fiscal policy and the monetary policy. It will not be that the policies and programmes will be in one direction while the budget is facing the other direction and the monetary policy will be of a different nature. There are also examples of provisions of monetary policy brought from the budget itself. It does not work with the government agencies adopting different approach,’ Finance Minister Pun said.

He also maintained that a change in the tax rate to be made through the next fiscal year’s budget would be done so justifying the need and appropriateness for the same. ‘We do not make changes to the tax rate through anyone’s influence. The Economic Bill will have three columns specifying the reasons and justification for the change in the tax rate. We will clarify the reasons for change in the tax rate. In the development policy too, we will move ahead by increasing the expenditure capacity. Although a double digit economic growth is not possible, we are hopeful of achieving an economic growth of 7.5 per cent,’ the Finance Minister said.

On the occasion, President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Chandra Prasad Dhakal opined that the overall economy is in problem due to the slump in both market demand and supply. He claimed that the government has given a message of creating investment-friendly environment by changing the related laws in a short time through ordinance.

The FNCCI president suggested that the budget for the upcoming fiscal year should keep the demands and suggestions of the private sector in priority. He suggested to the government to also maintain uniformity and harmony between the budget and the monetary policy.

Dhakal also suggested announcing the Investment Decade through the upcoming fiscal year’s budget and providing concessions to the industries creating a large number of jobs. According to him, the tax imposed on the merger and acquisition of banks and financial institutions has sent out a wrong message. He complained that there is problem due to the many institutions created to regulate and monitor the private sector.

‘There are many regulatory and monitoring institutions. This has put the private sector in trouble. There is a problem with the regulation and monitoring by many agencies. There is a narrative that banks and financial institutions have made a lot of money.

But now many banks and financial institutions are in trouble. Some special arrangement is necessary for them,’ he said. He mentioned that the capital expenditure of the government is low and there is a problem that the builders are not getting paid even where the expenditure has been made.

President of the Nepal Chamber of Commerce, Kamalesh Kumar Agrawal, has shared that there would be problem in national capital building as there is now negative growth rate in production and construction sectors. He mentioned that the number of blacklisted entrepreneurs is increasing failing to pay back the loan of the banks and financial institutions, adding there was slowdown in national economy due to tight finances and monetary policy brought by the government after COVID-19.

Agrawal stressed on the need of policy-level protecting to private sector to end economic slowdown as 3.3 per cent economic growth rate has been projected in the current fiscal year, blaming the government of victimizing the private sector to increase revenue. He pointed out the need of amendment to income tax act.

Similarly, President of the Confederation of Nepalese Industries, Rajesh Kumar Agrawal, said the private sector is focusing its attention on how to save the investment rather than increasing investment. ‘A point of view of looking at the private sector should be changed. National capital building is decreasing due to our contradictory policy,’ he said, pointing out the need of bringing budget focusing the investment in infrastructure.

He suggested that there was necessary of quality measuring and labeling of imported goods, and imposing two-level customs tax on raw materials and produced goods. President of Nepal Bankers’ Association, Sunil KC, explained that banking sector is now in difficult situation.

‘Banking sector has accumulated an investable amount of Rs. 500 billion. Loan investment will not increase until morale of private sector is boosted. It is necessary to increase financial access of small and middle-scale enterprises rather than providing concession,’ he underscored.

He suggested to prepare infrastructures to implement provision related to digital loan, to invest in infrastructures to increase loan, implementing the facilities like challenge fund and blended finance to invest in information technology and startup.

Similarly, President of Independent Power Producers’ Association, Nepal, Ganesh Karki stressed the effective implementation as budget brought in previous fiscal years mentioned about providing discount to hydropower sector in VAT.

‘It is estimated that an investment of Rs. 6100 billion is required in the hydroelectricity sector, but the investment has not increased. There is going to be big problem of insurance in the hydropower sector. The projects have avoided renewing the insurance,’ he said and suggested taking the private sector on board in the electricity transmission line and power trade.

Confederation of Banks and Financial Institutions, Nepal (CBFIN) president Upendra Paudel pointed out the need of bringing a comprehensive budget instead of a contracted one. He said it is necessary to reduce tax and expand tax ambit to increase market consumption. He also claimed that there was tax evasion.

The agriculture sector should be put in priority, he stressed. Paudel suggested bringing foreign investment in the banking sector. Registrar of Kathmandu University and economist Achyut Wagle said although all sides know about the status of the economy, they have not been able to carry out works towards resolving the economic issues.

As he said, the government should be courageous enough and bring a transformative budget for one time. He underscored on the need of building a IT Park for the promotion of the information technology sector.

Wagle suggested preparing a robust supply chain of the goods produced. He raised the issues that a structure should be prepared to build digital economy and to regulate it, low interest rate should be imposed on high value added goods and sectors, under invoicing should be controlled to increase areas of revenue and the 16th periodic plan has not given importance to human resources management.

Likewise, Finance Secretary Madhu Kumar Marasini pointed out the need of adopting remedial method by reviewing the facts of economy and developing provinces and local levels as the engine of production. The government would bring the budget raising hope and boosting the self-confidence and, he added, stating that the government was serious to address the problem of low economic growth rate.

President of the Nepal Automobiles Association Nepal, Karan Chaudhary, said the automobiles sector is facing problem. He explained, ‘Make in Nepal policy has not become effective, the state has not put the auto sector in priority saying it is unproductive sector.’