Sunday, August 5, 2012

Economy faces challenge due to political instability

The government has been facing challenges in creating an investment friendly environment and propelling economic activities due to the lengthening political uncertainty.
"Lack of political consensus has added more challenges in creating an investment friendly environment," said finance secretary Krishna Hari Baskota releasing the annual evaluation report of the Finance Ministry here today.
"Despite the increasing foreign aid commitment, the government's absorptive capacity has not increased," he said, adding that the process of privatisation and divestment of public enterprises — that do not need to be operated by the government — has also slowed down due to lack of political consensus.
Baskota also accepted that the government has failed in controlling non-budgetary expenses and unproductive capital expenditures, and expedite productive spending on development work. "However, the government should make the project heads responsible by signing agreements with them and enhance the capacity of the project staff to expedite the productive capital expenditure," he suggested, adding that mid-term funding has to be changed into mid-term budgetary evaluation process.
He also did not forget to promise to check revenue leakage that has become chronic in recent years, bleeding the government coffers dry.
The Finance Ministry investigated 518 suspicious firms involved in the VAT scam and fixed Rs 6.59 billion revenue in the last fiscal year. The ministry is committed to checking the leakages, the finance secretary said.
Each and every ministry has to prepare its annual progress report and submit it to the Prime Minister's Office (PMO) under the Good Governance Act 2064. Finance Ministry is the first to prepare and submit its annual report to the PMO, whereas other ministries have sought a month's time to submit their annual progress report.
Tax net expansion
KATHMANDU: The government has expanded its tax net. By the end of fiscal year 2011-12, a total of some 955,737 firms were registered at the tax office, said finance secretary Krishna Hari Baskota. "Some 539,098 are registered under income tax, 113,627 under VAT, 271,606 under PAN, and some 31,406 have been registered under excise," he said, adding that the total number could be less as the same person could have registered under PAN and VAT depending on the income level. "However, the number is also low on the basis of total population of the country," he said.

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