Despite low
capital expenditure and less borrowing from the private sector followed by
rising inflation, the government today claimed that it still could achieve the 5.5
per cent economic growth rate targeted by the fiscal policy and supported by
monetary policy.
Better performance of the agriculture and service sectors would
help achieve growth for the current fiscal year, said finance minister Ram
Sharan Mahat at the Mid-Term Budgetary Review for the current fiscal year
2013-14, here today at the Finance Ministry.
"Positive political developments and its impact on investments
apart from good agricultural output will also help achieve target economic
growth rate," he said, adding that the industrial sector is, however,
still poor. "Seven to eight per cent growth is possible only by increased
investment and its efficiency."
The five-time finance minister Mahat also lamented the poor
investment performance by both the government and private sectors.
"The failure to spend capital budget has swelled government
treasury apart from low borrowing from the private sector that has flooded the
banking system with excess liquidity,' he said, adding that it could, however,
hit the growth prospects.
The government has Rs 65 billion in its treasury at the moment, while
banks and financial institutions have excess liquidity of around Rs 50 billion.
As of February 27, the government has been able to spend only
19.72 per cent capital expenditure, according to Mahat. "However, there is
still an additional demand of Rs 20.89 billion but in the unproductive sectors."
The minister also said that he would cut the budget of the
projects failing to spend and divert the funds to better performers.
While, the capital budget has shown poor performance, the
recurrent expenditure has seen increment. "There has been an additional
demand of Rs 12.84 billion under the recurrent budget by security agencies,
increased salaries of government employees and a rise in expenditure for
foreign trips and the Constituent Assembly (CA) election, he added.
However, the government is planning to bring guideline to reduce
recurrent expenditure.
Hoping that an early budget could help ensure the better capital expenditure,
he said the government is planning to bring the budget before the fiscal year
ends.
Inflation target revised upward
KATHMANDU: The mid-term budget review has revised inflation upward
to 8.5 per cent from eight per cent. A rise in money supply due to the second CA
election and supply constraints that led to an increase in food prices pushed
the inflation to double digit in the fifth month. Mahat said that food prices
jumped by 13 per cent despite increased production which suggested that there
is a problem in the supply system due to middlemen. The review also suggested
to address supply related problems to reduce inflation, apart from monetary
instrument.
Trade deficit to continue to
balloon
KATHMANDU: The review has also showed serious concern on ballooning trade deficit. Trade deficit stood at Rs 288.76 billion in the first half of the current fiscal year, whereas the ministry has estimated it to reach Rs 550 billion by the end of the current fiscal year. The total trade deficit stood at Rs 480 billion in the last fiscal year. The remittance cannot help float the economy, Mahat said, adding that there is an urgent need to enhance competitiveness of domestic products and increase exports.
KATHMANDU: The review has also showed serious concern on ballooning trade deficit. Trade deficit stood at Rs 288.76 billion in the first half of the current fiscal year, whereas the ministry has estimated it to reach Rs 550 billion by the end of the current fiscal year. The total trade deficit stood at Rs 480 billion in the last fiscal year. The remittance cannot help float the economy, Mahat said, adding that there is an urgent need to enhance competitiveness of domestic products and increase exports.
KATHMANDU: Through the mid-term review of the current fiscal year, the government has also downsized total budget for fiscal year 2013-14 to Rs 479 billion from Rs 517.24 billion. The government revised the budget due to low capital spending during the review period, said the finance minister.
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