The government has allotted NPR 36 billion 546 million 600 thousand for the next fiscal period.

The assembly couldn’t discuss on this due to the obstructions created by the main opposition political party CPN (UML).

Due to the political turmoil, the provincial government has decided to implement the budget through an ordinance.

The chief of Karnali, Govinda Kalauni, discontinued the eighth session of the assembly on Wednesday night upon the recommendation of Karnali Chief Minister Mahendra Shahi.

Stay Tuned to NepaliSansar for Latest Nepal News Updates!

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Announcing the mid-term review of the annual budget for FY 2021/22, the government has reduced the annual expenditure target to NPR 1.34 trillion, 91.9 percent of the proposed amount of NPR 1.47 trillion.

Declaring the restructured financial allocation for the ongoing fiscal year, Finance Minister Bishnu Prasad Poudel cited the following reasons that forced the government to revise the budget:

• Shortfall in revenue collection and public expenditure
• Extension of the deadline of the projects
• Delayed payments
• Failure to resolve the issue related to the public procurement system and contractors
• Delayed approval of the guidelines and laws related to the implementation of projects planned in the annual budget
• Lack of coordination among the three tiers of government
• Mid-term election of HoR
• COVID-19 vaccination

Also Read: Nepal Tourist Arrivals 2021: 8,874 Foreigners in January!

The revised Nepal budget allocations are as follows:

• Recurrent expenses: NPR 914.78 billion, 96.40% of proposed NPR 948.94 billion
• Capital expenditure: NPR 283.4 billion, 80.20% of proposed NPR 352.91 billion
• Financial management: NPR 146.86 billion, 85% of the proposed budget
• Revenue collection: NPR 959.68 billion, 94.85% of proposed NPR 1.01 trillion

According to FM Bishnu, the expenditure from public revenue and domestic borrowing will be NPR 174.74 billion, while it will be NPR 35 billion from foreign aid and NPR 235 billion from foreign debt.

Moreover, the revenue collection during mid-July last year and mid-January this year stood at NPR 450 billion. So, the government expects to collect NPR 509.1 billion in the second half of the current FY.

The government has also withdrawn from its ambitious economic growth target of 7 percent set for this fiscal year.

Stay Tuned to NepaliSanar for Latest Nepal Financial News!

Also Read: Best USD to NPR exchange rate for today

The post Nepal Trims Budget Allocation by 9%, Blames COVID-19! appeared first on Nepali Sansar.

Finance Minister Yuba Raj Khatiwada presented the NPR 1.47 billion budget for FY 2077-78 (2020-21), with a slew of measures including sector-wise priorities and policy-level decisions.

Out of the total budget for the new fiscal, NPR 949 billion has been categorized as current expenditure, followed by NPR 353 billion as capital expenditure and NPR 173 billion as the financial provisioning.

With the due emphasis on safe and secure social welfare, the government continued to focus on infrastructure development across multiple areas.

“Enhance the state’s role in public welfare by fulfilling requirements that are considered fundamental rights and basic necessities of the citizen,” reads one of the budget priorities.

Taxation is one critical area that is closely related to the public and the nation’s economic development.

Under the new revenue policy for FY 2020-21, the government proposed to have a future-oriented, transparent and business-friendly taxation system.

Video: New Income Tax Slab Rates in Nepal 2020-21

The government called for enhanced participation of taxpayers and efficient revenue management through health and friendly tax administration.

Nepal Income Tax Slab Rates 2077-78 (2020-21), Provisions and Concessions

For Individuals

1) Personal Tax

• Residents: Natural Person

A) Employed Individuals

 B) Employed Couple (Married Couple)

• Non-Residents

2) Corporate Income Tax

•  For Entities – Company/Firm/Industry

• Tax Concessions-1

• Tax Concessions-2

Likewise, there are concessions to industries by investment amount, presence in SEZs, and special areas.

2) Customs Duty

• Micro, cottage and small industries will get 50 percent exemption on machinery imports
• Increase in customs duty on petroleum product imports from NPR 15,200 to NPR 25, 200
• Increase in customs duty on import of gold or semi-manufactured forms or in powder from NPR 5,000 to NPR 8,500 per tola
• Industries importing bulk and bitumen petroleum for their consumption will get 25% concession
• Increase in customs duty on import of Spirits obtained by distilling grape wine or grape marc from NPR 1,200 to NPR 1,500 per liter
• Reduction in customs duty on import of separator used in Agriculture factory from 5% to 1%
• Reduction in customs duty on import of Balances of a sensitivity of 50 mg or better, with or without weights by Medical industry from 5% to 1%
• Industry producing Surgical Mask will be levied 5% customs duty on import of unwoven textile under, elastic ropes, rustproof metal strips
• Poultry Industry will get 50% rebate on custom duty for fertilized eggs for the production of chicks

3) Value-Added Tax (VAT)

• 13 percent discount on VAT on goods and services remains unchanged from the previous year
• VAT on goods exports shall remain ‘zero’ percent
• VAT paid by UN on its products and services for Covid-19 response shall be refunded
• Individuals operating without VAT registration, even after recommended, may be penalized with 50 percent of payable tax
• Transportation, tourism and movie theatres may now pay tax on a trimester basis

4) Vehicle Tax Rate in Nepal FY 2020-21 (2077-78)

a) Motorcycle

b) Electric Vehicles

c) Car, Jeep, Van, and MicroBus

5) Excise Duty

6) Other Key Taxes and Fees in Nepal

a) Education Services

Students going abroad for higher education at 2% of the foreign exchange facility availed from Banking and Financial Institutions (BFIs)

b) Infrastructure Development

Petrol and diesel imports into Nepal will be subjected to this tax at Rs. 10 per liter for development at the customs point

c) Pollution Control

Petrol and diesel sales within Nepal will be paying these taxes at NPR 1.5 per liter

d) Telecom Services

New connections or ownership transfer on fixed-line services will be charged Rs 500 per connection, and mobile phone recharges will pay an additional 2% of the total value

e) Casino Royalty

Licensed casino operators, per license, will pay NPR 40 million per annum and operating modern machine and equipment will pay NPR 10 million per annum

In Conclusion
There are also other tax rates, provisions and concessions under different taxation sections for individuals and entities across varying levels of income.

More Budget 2020-21 News:

• Budget FY 2020-21 Faces ‘Criticism’ Over Increased Duty on EVs
• Nepal Fiscal Budget 2020-21 Promises ‘Free Electricity’

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The most important subject of discussion, Nepal Federal Budget FY 2019-20 has created a set of expectations from various institutions and individuals across the country, which are connected with the challenges they face in contributing to the development of the economy.

Here’s a list of industry leaders’ expectations from Nepal Budget FY 2019-20:

Federation of Nepalese Chamber of Commerce and Industry (FNCCI)

FNCCI opines that this year’s budget should focus on developing measures to encourage Nepal’s production sector. This includes identifying related problems and using the budget to solve them, improving the judicial system and reducing corporate income tax among others.

“The budget should focus on improving the judicial system, especially related to tax issues, stabilise interest rate in the banking system, ease land acquisition and facilitate environmental issues while establishing a factory and promote export by giving special treatment to industries that manufacture products with high value addition. Similarly, the budget should also reduce corporate income tax by five percentage. In a nutshell, the budget should adopt measures to bring down the cost of doing business in the country.” – Federation of Nepalese Chamber of Commerce and Industry.

Confederation of Nepalese Industries (CNI)

Besides increasing Nepal’s production base, #NepalFederalBudget2019 should also address the rising trade deficit, says the Confederation of Nepalese Industries.

Through the budget, the Nepal Government should make sure that imported raw materials taxes are not more than imported finished goods.

“Promotion of the industrial sector is crucial to achieve desired economic growth and developmental goals. For this, it is crucial that export-oriented businesses receive special treatment from the government, like special tax incentive packages for them. The government should also introduce measures to cope with the liquidity situation. The budget should also take concrete decisions to ease and simplify customs procedures.” – Confederation of Nepalese Industries

Independent Power Producers’ Association – Nepal (IPPA- Nepal)

IPPA opines that the government should amend its Public Procurement Act, which it considers as an obstacle to realizing the goal of generating 15,000 megawatts of electricity by FY 2028.

It also believes that both domestic and foreign investors be given equal opportunity to promote the private sector investment in the power sector.

“Nowadays, the government has given more facilities and is focusing on bringing huge foreign direct investment, but without much success. We have suggested the government to introduce similar provisions for both domestic and foreign investors to boost private sector investment in power sector. We need a one-window system for hydropower sector to ensure hassle-free and timely completion of procedures.” – Independent Power Producers’ Association–Nepal

Nepal Chamber of Commerce (NCC)

As per the Nepal Chamber of Commerce, the budget should work towards shifting Nepal’s import-based economy to a production-based one. For this, the association says that the government should encourage and promote small & medium-scale industries in the agriculture & handicraft sectors.

Thirdly, the budget should be able to come up with programs that create more job opportunities for Nepali youth within the country.

“The budget should focus on driving the country’s import-based economy towards production-based. This can be done by promoting domestic industries and entrepreneurs. Likewise, low development expenditure has been a major problem in Nepal. The government should develop a budget expenditure timeline and make it mandatory for ministries to spend a certain chunk of development budget within a specific time period.” – Nepal Chamber of Commerce

Federation of Contractors’ Associations of Nepal (FCAN)

Technical manpower seems to be a persistent issue for contractors looking to execute Nepal development projects, according to FCAN.

Additionally, the association has some reservations against a few provisions of the recently-revised Public Procurement Regulations, which penalize contractors who do not complete projects in time.

The association believes that timely project completion depends on coordination from government officials and other stakeholders.

“The contractors are facing scarcity of technical manpower in the country to execute development works. The government needs to develop sector-wise technical manpower in the country. We also need to bring in skilled manpower through contract agreements, and the Ministry of Labour, Employment and Social Security needs to manage such things for us. – Federation of Contractors’ Associations of Nepal.

Nepal Association of Foreign Employment Agencies (NAFEA)

With more than 500,000 migrants traveling abroad for employment, NAFEA thinks that the government should arrange for a large-scale, internationally recognized training center for migrant aspirants.

Besides, it suggests that the government create measures to ensure a hassle-free working environment for workers in foreign destinations through the upcoming budget.

“The government is only focused on supplying labor and inking various bilateral agreements. However, much remains to be desired in terms of cross-checking whether the signatories are abiding by those agreements. Among others, the government should make Nepali embassies in destination countries more responsible towards the issues of migrant workers in those countries.” – Nepal Association of Foreign Employment Agencies

Organic Farming Promotional Taskforce

The Association advices that the government mobilizes this year’s budget to promote promoting sustainable organic farming as Nepal presents a suitable environment for the same.

It further suggests that this be done, with existing resources rather than following other countries’ practices.

Besides, the government should work towards the classification of farmers, which helps it in identifying which farmers really need government support. It also suggests that the government focus on increasing production levels with the upcoming budget.

“The next fiscal year’s budget must prioritize promoting sustainable organic farming. Although the government’s election manifesto had made tall promises, the recently unveiled government’s policies and programs disappointed the farmers to some extent. Besides, import of agricultural products is increasing by the day, so the next budget must prioritize increasing the production level of the country. Also, farmer-oriented programs must be handed over to the local levels.” – Organic Farming Promotional Taskforce

Pacific Asia Travel Association, Nepal (PATA-Nepal)

With the focus on improving infrastructure, the renowned travel association says that the next budget should focus on building and improving infrastructure, which is important for tourism development.

This includes the construction and management of roads, airports, hotels and more. Therefore, the next budget should focus on completing the big airport projects including Nijgadh International Airport, Gautam Buddha International Airport and Pokhara Regional International Airport on time.

“The next budget should focus on planning as well as timely completion of tourism infrastructure. We have to properly manage, upgrade or build airports, roads, hotels, among others, to handle a large number of tourists. Besides, lack of skilled human resources is a problem in every sector of the country. Moreover, before bringing any new program, the government has to go through research and development modality. Also, we need to explore new destinations where we can promote and market our tourism products.” – Pacific Asia Travel Association – Nepal Chapter

Hotel Association Nepal (HAN)

HAN opines that the upcoming budget should create pathways for investment in the hotel industry.

Besides, the government should also utilize the budget to prioritize the construction of tourism infrastructure, which includes developing air and land connectivity, improving roads condition and more.

“Despite having immense potential of attracting a large number of tourists, lack of air and land connectivity, worst condition of roads and pollution are discouraging tourists from visiting Nepal. So, to address these issues, the budget should be infrastructure-oriented. The next budget must remove VAT from agricultural and other products procured by the hotels from the local market.” – Hotel Association Nepal

Forum for Protection of Consumers’ Rights

The consumer rights association opines that the government may have had some setbacks in implementing the previous year’s budget, however, it has scope this year to improve on its setbacks from the past.

It advices that the budget should revise the existing VAT, focus on production and commercialization of local products and promote production-based subsidy for farmers.

“Looking at the consumers’ right, the budget should revise the current VAT system of the country. A standard should be set for VAT implementation. Similarly, currently 80 per cent of our daily consumables are being imported. So, the next budget should prioritize production and commercialization of local products. The country’s economy is currently dependent on remittance, which is not sustainable. So, the next budget must bring programs that generate employment for youth.” – Forum for Protection of Consumers’ Rights

Budget Size Essential to Address Underlying Issues

Besides the kinds of reforms and policies that industry leaders and key stakeholders expect from the upcoming budget, experts also think that the size of the budget will also play an important for the successful implementation of these programs and policies.

Tribhuvan University Central Department of Economics Kusum Shakya states that expansion of the budget size is important to fulfill the needs of the different layers of the government.

“However, the budget should not be allocated for programs and projects that are infeasible and only add to the financial burden of the government,” she said.

Economic analysts also think that the Nepal federal budget FY 2019-20 should not be populistic or only cater to government aspirations. It should focus on paving way for feasible policies and projects, while providing scope for execution.

Former National Planning Commissions Vice Chair-person Swornim Wagle thinks that the budget should address upcoming vulnerabilities in the economy including some of the issues mentioned by the aforementioned associations and institutions such as rising trade deficit and financial sector instability among others.

“Sadly, it seems that the government is ignoring these issues and trying to once again accommodate populist programs in the budget,” Wagle said.

Experts opine that the budget should also work on improvising existing policies that hinder speedy development including tax administration and procurement policies. They believe that fixing these aspects alone will boost development in the country.

Economist Biswo Poudel states that the new budget should come up with solutions to reduce the current expenditure, which is rapidly increasing.

“In the name of federalism and fulfilling lawmakers’ demands, the current expenditure — under different unproductive headings — is increasing. Such expenditures will add financial pressure on the government, which will ultimately affect the country’s development,” Poudel said.

Poudel also advices the government to analyze the lessons learned from previous budget implementations and use them to successfully implement the upcoming budget.

“Focus should also be on measures to expedite timely expenditure of the development budget,” he adds.

Overall, experts ask the government to initiate programs through the budget that can be started and completed within the coming fiscal year.

They also emphasize on maintaining fiscal discipline throughout all government layers with the upcoming budget and laying special emphasis on the manufacturing sector and simplifying tax rules.

Upcoming Budget to Focus on Ongoing Projects’ Completion

Meanwhile, officials involved in the annual budget statement preparation have said that the government will allocate adequate budget to the projects that are currently underway and have made significant progress over the past few months.

“Along with the government priority, we will also look at the progress made by the projects. If it is found that the projects need more budget, the sufficient amount will be given,” said Sudhil Bhatta, National Planning Commission Member.

Similarly, various ministries and their subordinates have sent out proposals to prioritize the completion of old projects, instead of introducing new ones in the annual budget announcement.

According to the Ministry of Urban Development Secretary Ramesh Prasad Singh, 95 percent of the budget sought from the government is for ongoing projects.

Earlier, Finance Minister Yubaraj Khatiwada had expressed that the government would like to celebrate the upcoming fiscal year for completion of projects in progress.

Let’s wait and watch what the Nepal Federal Budget FY 2019-20 has in store for the betterment of its people.

The post Nepal Federal Budget FY 2019-20- Expectations and Scope appeared first on Nepali Sansar.

Nepal’s capex saw a five-year high at Rs 267.25 billion in the FY 2017-18 that ended mid-July 2018, with the last month of the fiscal alone witnessing Rs 108 billion spending.

The government drew wide criticism for its rush spending in the last month!

Responding to remarks over the spending rush, the Finance Minister Yubaraj Khatiwada recently made new statements citing ‘dependence on revenue collection’ as the key reason behind the last-hour spending.

Government’s expenses, mainly capital expenses rise in the last quarter of the fiscal because the payments are issued based on revenue collection. Revenue collection surges only after the first half, says Khatiwada.

He further informed that the budgets for developmental projects were released in the third and last quarters of the fiscal after reviewing the performance of the completed tasks and that doesn’t mean the projects were taken up in the last month.

“Contractors who completed works in the third quarter might have received payments in the last quarter,” he added, while also admitting delays on contractors’ side in executing tasks.

Key Structural Concerns Haunting!
Ending the criticism, Khatiwada noted that the government will soon take necessary measures to address the structural concerns pertaining to budget execution.

In this regard, he highlighted key concerns that are acting as hurdles for the government.

Tax Revenues: According to the minister, timely collection of tax revenues in line with the taxation rules is one major concern delaying the early release of payments from the government’s treasury.

The taxation rules mandate individuals to present 40 percent of the annual income tax estimation by the end of the first half of the fiscal, which decides the surge in governmental revenue for further spending.

Project Preparedness: Another key concern is the lack of preparedness in case of some projects put forth for inclusion in the budget.

Ministries select projects without any preparation. They should know that just announcing projects is not sufficient to implement them. They should at least understand the basics of project implementation, says the Finance Minister.

Need of the Hour
Khatiwada pitches for early addressal of the aforementioned problems to ensure planned budgetary execution.

The minister calls for trimming down the projects that lack early preparedness.

The concept of a project bank must be established, and only matured projects should be included in the budget, says the Ministry of Finance.

He further pitched on the need for development of necessary measures that support project implementation driving planned execution through feasibility studies, environmental impact assessment, legal clearances, among others.

Highlighting lack of inter-agency coordination as another key concern, the minister said budget execution is a collective responsibility of all the related stakeholders followed by strict quality monitoring.

Related Articles:

• Nepal’s Capex at 5-yr-high in FY’18, Delays Continue
• Nepal Federal Budget FY 2019-20: Highlights & Announcements

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The government’s capex saw a five-year high at Rs 267.25 billion in the ended fiscal against the actual allocation of Rs 335 billion, with Rs 108 billion spending in the last month considered as a major factor behind the rise.

Infrastructure development & construction accounted to a major share i.e., 79.7 percent of the total capital budget allocated for FY’18, the highest after 82.56 percent in FY 2012-13.

Factors Behind Rise
Provision of early budget system, releasing of full budgets to local units in three tiers, approving the programs and projects in line with the Line Ministry Budget Information System are among key factors that contributed to the rise in capex, say the officials.

“This might have played a part, if not a big part, in the increase in capital expenditure of the government. The government’s move to take action against non-performing and under-performing contractors was another reason for the rise in capital expenditure in the last fiscal year,” says Jagannath Devkota, Information Officer at Financial Comptroller General Office (FCGO).

Meanwhile, economists feel that allocation of funds to new projects outside budgetary allocation is also one of the key contributing factors to the increase.

“Funds totaling Rs 4-5 billion have been allocated for some new projects which are linked with political parties,” says Rameshore Khanal, former Finance Secretary.

In its mention about high spending in the last month, FCGO pointed that there hasn’t been any change in government’s act of late disbursement of the capital budget.

According to the regulatory, disbursing of more than 40 percent of the total capital budget has become a common trend for the country in the last five years.

Developmental Projects Hit!
Meanwhile, government officials argue that the high spending in the last month is not just for new developments and also include payments for tasks completed over the year.

On the other side, government agencies complain that the developmental projects are getting delayed due to untimely release of budgets forcing contractors to move away due to lack of needed resources.

According to the Roads Department, construction of nearly 800 bridges has been pending due to lack of required budgets.

“Thus, a large portion of payments is made in the closing months of the fiscal year. This practice hinders timely implementation of projects by contractors,” says Khanal.

Spending rush at the end of the fiscal is a clear sign of elevated fiduciary risk and improper execution of the allotted budget, says FCGO.

It’s time for the government to rethink on budget planning & execution!

Also Read : Ministries to Expedite Budget Expenditure in FY’18

The post Nepal’s Capex at 5-yr-high in FY’18, Delays Continue appeared first on Nepali Sansar.

Now that Nepal has the support of its neighboring countries, it is gearing up for its upcoming railway projects. The department is currently assessing its needs and addressing any issues that need immediate attention to meet one of its major goals of building a strong rail network internally and externally.

“We are assessing the needs and preparing a plan accordingly,” says Nepal Railway Department, Senior Engineer, Prakash Upadhyaya.

According to Upadhyaya, the department will shortly approach the Ministry of Physical Infrastructure and Transport, a crucial agency that is responsible for the progress of major infrastructure projects.

However, there are some issues that present obstacles in the department’s course of action.

Obstacles to the project:

• Currently, the budget and infrastructure allocated to the department is not enough to push the project forward. The government has given a sum of Rs 4.5 million for the department’s overall development including the study of multiple railway projects, which include the prospects of monorail
• The department lacks skilled labor and currently does not have any rail engineers.
• The existing workforce is not sufficient as there are only 40 persons presently working for the agency.

The department officials opined that budget allocation will not impact their work provided that a pre-feasibility study of cross-border railway lines is financially supported by the supporting neighboring countries.

Despite the challenges, Nepal’s railway department is undeterred and is keen on garnering support from its neighboring countries to commence the projects.

Talking about the situation, Upadhyaya says, “We may lack the resources, but we do have Nepali people who have been trained in railway engineering in countries like China and South Korea. We should be working towards attracting such individuals to work for us.”

With the aim of equipping its existing workforce with the required skills for the projects, Nepal has sent two if its engineers to China to study a Master’s degree in Railway Engineering.

Infrastructure expert Suraj Raj Acharya is of the opinion that the country needs to be clear on the railways’ significance in the country’s transport infrastructure before zeroing on aspects construction or technical feasibility.

Making his point clear, he says, “There are several railway technologies and the country should cautiously pick an appropriate technology that can help achieve the development goal the country aims to achieve. A rail having a speed of 200 hours per kilometer can adversely impact number of airports in the country.”

Have we made consideration of such situation before creating railway euphoria?” he questions.

The latest update comes as a development to the discussions the prime ministers of Nepal and India had with regard to the prospects of developing railway lines within Nepal and beyond in their recent meetings.

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