In a landmark step, the newly-formed Oli-led Nepali Government is unveiling the country’s first federal budget for FY 2018-19 or FY 2075-76 (Nepali year) on May 29, 2018.

Nepal’s Finance Minister Yubraj Khatiwada will reveal the budget at a joint meeting in the Nepali Parliament on the aforementioned date at around 4 p.m.

Speaker of the House of Representatives, the lower house of the Federal Parliament of Nepal Krishna Bahadur Mahara announced this officially on May 27, 2018.

As per the Nepali Constitutional mandate, the Nepali Government is supposed to unveil the budget in a joint parliamentary meeting on Jestha 15 (May 15-June 14 as per the Western calendar), the second month of Bikram Samwat in the official Nepali calendar.

Expenditure Up for Economic Growth

As per the available sources, the Government of Nepal is most likely to place a Rs 16 trillion budget for the
FY 2018-19.

“The economic growth of the previous decade has remained average at 4.3 percent. Now it is expected to reach 5.9 percent this year,” says Yubaraj Khatiwada in his parliamentary address.

However, experts feel that the presumed economic growth can be achieved only by increasing the tax levied on the public.

“The expenditure has increased, the source of income has decreased constantly for which the government’s major focus lies on collecting revenue, which will hike the import plumping the custom duty that will definitely result in dearth, constant increment in the price of petroleum in the upcoming fiscal year,” says an economic expert and a senior Nepali journalist.

Two days prior to the budget day, the Finance Minister also noted that the finance deficit is most likely to reach 10.4 percent.

Inflation is a key matter of concern for the country; inflation in Nepal increased to 6 percent in the last eight months of the current fiscal year from a previous value of 2.3 percent.

Development & Fiscal Discipline

Assuring development while balancing the fiscal discipline remains a key area of focus for the Oli-led Nepali Government.

Prior to the budget, programs and policies on top priority for the government were announced on May 27, 2018, in which, social and infrastructure development projects took the top place.

While the National Planning Commission (NPC) is projecting the relevant budget to be at around Rs 1.2 trillion for such projects, the finance minister is expected that to be above Rs 1.45 trillion.

When it comes to pooling revenues, the government is aiming at a collection of Rs 1 trillion in the coming fiscal while also raising Rs 300 billion as a foreign fund.

According to the Finance Ministry officials, the provincial and local governments are most likely to see a significant budgetary allocation of around Rs 400 billion for developmental activities.

Overall, the government is looking at an 8 percent economic growth rate to meet the targets set by the annual policies and programs such as two-fold rise in per capita income in five-year period, among others.

Allocation Across Sectors

According to the Finance Ministry, a significant amount of budget will be allocated for flagship projects in infrastructure, energy, agriculture, tourism, among other sectors and on PM’s dream projects such as railways and waterways.

Energy and irrigation projects such as the Sunkoshi-Marine Diversion Program and Butwal-Sunauli cross-border transmission line are set to receive a due attention in the upcoming budget.

Some of the projects that are likely to receive budgetary attention include the Madan Bhandari Highway, railway expansion covering metro rail in Kathmandu, Kathmandu-Tarai Expressway and a feasibility study on Nepal-India waterways.

Taxation is another area that is going to see some significant changes in this budget. Along with a significant revisal of tax regime, the new budget is more likely for increased tax on import on luxury products such as liquor and cigarettes.

The government is also looking at royalties, land registration and fees as the additional sources of income for the treasury.

When it comes to the government sector, the civil servants’ salaries are not going to see any significant changes other than little adjustments in indirect benefits and allowances.

Allocation for social security allowance is also likely to take a back-step because of the increased allocation to the local and provincial bodies.

Overall, domestic industries are more likely to get the due support in this budget with those using local raw material on top priority.

Special Schemes

As part of schemes, a special program called ‘Sustainable Energy for All’ is going to be implemented with focus on renewable and hydropower sources. “We’ve focused on reservoir projects as well as expansion of transmission lines under this program,” says an NPC member.

Towards ensuring clean environment, another scheme called ‘Nepal Clean Environment Campaign’ also likely to be announced towards curbing air pollution and encourage the usage of electric vehicles.

Current Challenges, Ways Forward

Two of the key current challenges for Nepal are with regard to foreign exchange reserve and food deficit.

According to the Nepal Rastra Bank (NRB), Nepal’s foreign exchange reserves have come down over the last three months affecting the country’s ability to finance imports.

In its third quarterly review of the country’s monetary release on May 26, 2018, NRB reported a massive expansion of imports, outflow of dividends by foreign investors and slow growth of remittance contribution to decreased foreign exchange reserves.

NRB statistics show a decline in the country’s foreign exchange reserves from USD 10.31 billion in mid-July 2017 to USD 10.16 billion by mid-April of 2018, a decline over the previous fiscal.

After a consistent rise driven by rising remittances over the years, foreign exchange reserves of Nepal started dropping down since the mid of January 2018.

“We are not worried about current drop in foreign exchange reserves as our target is to keep such reserves to sustain the imports of goods and services for at least eight months. But, the situation may worsen provided the import continues to surge and remittance growth continues to slow and export does not grow as required,” says Nara Bahadur Thapa, Executive Director of NRB.

Meanwhile, the country is also currently facing a food deficit despite the surplus harvest in the current fiscal year. The Economic Survey 2017-18 released on May 27, 2018 has reported a food deficit of 71,400 tons in the current fiscal despite the presence of 898,115 tons surplus from the previous fiscal.

In another development with regard to trade, Nepal is hoping high on trade activity through India’s Vizag port. A Nepali delegation that visited Vizag (India) expressed confidence over controlling overall end-to-end logistics costs and improving trade supplies to Nepal through Vizag port’s infrastructure.

On an End Note

The new budget is definitely going to be a path-breaker for Nepal in its new path of development led by the newly-formed government. Besides internal functioning, the Oli-led government is also focusing high on external relations by expanding Nepal’s bilateral and business ties with other countries.

Let’s hope the new budget will create a needed scope for the country’s overall development while also balancing the nation’s external growth on a global scale!

Related Article:

• Nepal Federal Budget FY 2019-20: Highlights & Announcements

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Expressing his views on strengthening ties with the neighboring Asian giants, Oli spoke on a wide range of issues pertaining to Indo-Nepal bilateral ties including protection of sovereign rights, enhancing border connectivity and review of all provisions related to Indo-Nepal relations, among others.

“We have great connectivity with India and an open border. All that’s fine and we’ll increase connectivity even further,” read Oli’s recent statement.

On protecting each other’s rights and addressing related challenges, he said, “There were some elements in the Indian establishment that caused some misunderstanding, but Indian leaders have assured us that there will be no interference in the future and we will respect each other’s sovereign rights”.

Oli also mentioned about the provisions pertaining to Nepalese serving in the Indian Army.

He said, “This should be internally and mutually discussed and corrected, if necessary. We live in a new world, and Nepal is starting a new journey, we have to update whatever is considered outdated and bring it in line with the modern era.”

Amendment of Nepali Constitution to address the issues regarding representation of Madhesis, mostly of Indian-origin, in Nepali Parliament is another major issue in Oli’s tasks list with regard to clearing confusions in Indo-Nepal bilateral relations.

Meanwhile, in a recent conversation, Indian Prime Minister Narendra Modi had assured all possible support to the newly-appointed Nepal PM towards overall development of Nepal.

Besides, Indian External Affairs Minister Sushma Swaraj’s recent visit to Nepal, ahead of the announcement of new Nepali PM, also reiterates Indian Government’s willingness to support Nepal.

It’s Time for New President and Vice-President

Post the announcement of new PM, now the time has come for the election of candidates for President and Vice-Presidential roles.

The Election Commission (EC) of Nepal has already begun discussions with the political parties in this regard.

“The meeting commenced on the chairmanship of Chief Election Commissioner Dr. Ayodhi Prasad Yadav from the Election Commission and presented the schedule for the election of the President and Vice President to be held within mid of March. The politicos also have responded positively regarding the proposal,” said EC in its official release.

EC had earlier announced March 05, 2018 and March 17, 2018 as the tentative dates for the election of new President and Vice-President of the country.

The post Oli Mulls Updated Connectivity, Sovereign Rights with India appeared first on Nepali Sansar.

Deuba’s resignation from PMO welcomes the Communist-led new Nepali Government with Khadga Prasad Sharma Oli as the next Prime Minister.

Deuba served in PM office for eight months post the country’s transformation from a Hindu monarchy to the federal republic.

The main target of the Deuba-led Nepali Government was to complete the three phases of the country’s most-awaited landmark elections needed for the implementation of new Nepali Constitution.

“My main responsibility was to hold the three phases of elections for the implementation of the new constitution. My responsibility has been fulfilled, so I have decided to resign,” Deuba said in a statement.

All Set for New Government

The most-awaited Nepal General Elections 2017, parliamentary and provincial polls, saw the grand victory of Communist alliance of CPN-UML and CPN-MC over the ruling Nepali Congress.

After registering a grand victory, the communist alliance parties have been in discussions over the announcement of the PM candidate.

Though two names Oli and Pushpa Kamal Dahal came into the picture, Oli has been finally confirmed as the next Nepal PM.

After having served a similar position from October 11, 2015 to August 3, 2016 Oli is coming back again as the 41^st PM of Nepal.

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Termed as a goodwill visit, this bilateral visit is being considered as a welcoming message for the start of India’s cordial relations with the Communist-led Government of Nepal that is yet to be formed.

As part of the visit, Swaraj called on the President of Nepal Bidya Devi Bhandari and also held discussions with a wide range of high-level Nepali politicians including CPN-UML Chairman K P Sharma Oli, CPN-MC Chairman Pushpa Kamal Dahal and Chairman of Nepal’s Federal Socialist Forum Upendra Yadav, among others.

During the discussions, Swaraj assured Indian Government’s full-fledged support to Nepal in its development and also in taking ahead bilateral ties between both the nations.

“Exchange of views on advancing our multi-dimensional relationship took place,” tweeted Raveesh Kumar, Indian External Affairs Ministry Spokesperson.

In a one-one discussion with Dahal, Swaraj said, “We will extend full cooperation to Nepal in attaining political stability and development.”

In response, Dahal reportedly said, “The talks we had were very positive and constructive. We discussed about the situation emerging after the conclusion of the elections and the preparation for formation of new government. Swaraj assured that India will extend full cooperation to Nepal in her efforts towards attaining political stability and development.”

Meanwhile, the Communist Alliance is currently busy in preparing for the formation of new Nepali Government, post which, Indian Prime Minister Narendra Modi is also most likely to visit the Himalayan nation (according to CPN-UML).

“Modi telephoned Oli twice and both leaders invited each other for a visit to their countries,” informed CPN-UML Secretary Pradip Gyawali.

Gyawali also informed that the formation of Communist-led new Nepal Government and proposed unification of both the left parties will be completed by March 2018.

India’s Aid to Nepal

In an interesting update that boosts Indo-Nepal ties, India has almost doubled its financial allocation to Nepal for 2018-19 in its annual Union Budget unveiled on February 01, 2018.

Out of Rs 15, 011 crore budget of the Indian Ministry of External Affairs, Nepal has been allocated a sum of Rs 650 crore for FY 2018-19 more than the previous year’s value of Rs 375 crore.

“The budgetary increase indicates it is likely to cover the earthquake reconstruction fund that was in the pipeline for some time and was discussed with the Nepalese leaders,” former Indian Ambassador to Nepal Ranjit Rae said in a statement.

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Representing their community background, some of the members took oath in their respective languages.

In Janakpur province, out of 107 members, 47 took oath in Maithili, 25 in Bhojpuri, 24 in Nepali and 11 in Hindi.

Seven Provincial Assembly members were elected for the seven different provincial assemblies namely Koshi (Capital: Biratnagar), Janakpur (Janakpur), Bagmati (Hetauda), Gandaki (Pokhara), Lumbini (Rupandehi), Karnali (Surkhet) and Far West (Kairali).

Anuradha Koirala in Province 3

Renowned Nepali human rights activist Anuradha Koirala took oath as the Governor of Province 3 on January 20, 2018.

Koirala has been widely-acclaimed for their extensive social activism through fight against women trafficking, among others and was conferred with the CNN Hero 2010 award.

Continuing her journey as a social worker, she joined the mainstream Nepali politics through Nepali Congress on November 12, 2017.

Govinda Subba for Province 1, Ratneshwar Lal Kayastha for Province 2, Baburam Kunwar for Province 4, Umakant Jha for Province 5, Durga Keshar Khanal for Province 6 and Mohan Raj Malla for Province 7 in Farwest are among others across different provinces.

On New Governance

Meanwhile, the Communist Alliance members met for a discussion on setting top priorities of the new Nepali Government that is yet to be formed on January 21, 2017

The Party Unity Coordination Committee (PUCC) meeting called for formation of a special task force to ensure good governance and development teams.

The resultant task force would set priorities for the new government based on the joint election manifesto to be formed by the two left parties, CPN-UML and CPM-MC.

Power sharing, organisational integration and ideologies for the unified party were among key issues Oli and Dahal discussed, informed PUCC member Narayan Kaji Shrestha.

“We asked the province chiefs of the party to finalize the names according to the clusters as decided by the task force,” Shrestha added while informed that the names would be announced on Jan 26, 2018.

Maoist Centre leader Pun said that the coordination committee endorsed the report and the two top leaders will make any correction if needed.

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RJP, a combination of Madhes-based parties, made this announcement on a condition that its demands should be met.

“That will depend upon the structure of the government and which party will lead the government and who will be the Prime Minister because none of the parties have fulfilled the majority (provision). But, yes we can support the government if the Prime Minister and the party, which will lead the government, fulfil our demand of constitution amendment and work upon the Madhesi agendas,” RJP-N Member Anil Kumar Jha said in a statement.

The Communist Party of Nepal-Unified Marxist Alliance (CPN-UML) won the majority of 48 parliamentary seats and RJP won 11 seats in the recently-concluded Nepal general election 2017.

Next Nepali Government

The formation of new Nepal Government has been a matter of discussion since the completion of general election on December 07, 2017.

Besides, the National Assembly election on February 07, 2018 and setting up of capitals for seven provinces are among key issues around the formation of new Nepal Government.

According to the Ministry of Finance (MoF) preliminary estimates, Nepal would require a minimum of Rs 820 billion to run the federal administration for the next three years along with the provincial infrastructure development.

According to the Finance Secretary Adhikari, the formation of a new Nepali government with a five-year mandate will bring in a lot of investment into the country along with the promotion of a favorable atmosphere.

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In a recent update, the formation of the new Nepali Government has been postponed to March 2018 post to the completion of National Assembly elections.

This was announced after a cabinet meeting on January 05, 2017 to discuss about the upcoming Assembly election.

Clearing the confusion over PM candidate, the recent announcement also informed that Khadga Prasad Oli would most likely be the next Nepali Prime Minister for a period of two-and-a-half years.

Following Oli, another key PM candidate of the left alliance Pushpa Kamal Dahal is likely to rule for the other two-and-a-half years of the term.

Constitutional Deadline Missed!

This update is coming at a time when the global Nepali community is waiting for the announcement of new government that was earlier planned at the end of December 2017.

While the constitution promulgated in 2015 called for the formation of new Nepali Government by mid-January 2018. However, political analysts feel that the constitutional deadline would be missed this time.

That is obvious because the Upper House is yet to be formulated. The Lower House is yet to be completed,” says Dr Surendra KC, a Kathmandu-based political analyst.

According to the analysts, delay in submission of final election results to the President’s office is resulting in the postponement of the new government formation.

National Assembly Election

Meanwhile, the National Assembly elections are scheduled for February 07, 2017.

The upcoming National Assembly election will see the election of 56 members including eight representatives each from seven provinces of the country.

And, the remaining three representatives will be directly selected by the President upon the government’s recommendations.

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The FPTP election vote count for 165 House of Representatives (HoR) and 330 Provincial Assembly (PA) seats declared the victory of the Communist Party of Nepal (CPN)-Unified Marxist-Leninist (UML) in the recent polls.

With 80 HoR seats & 167 PA seats by UML and 36 HoR & 74 PA seats by its poll partner CPN (Maoist Centre), the left alliance finally emerged as the single largest party as per the FPTP results.

With this, the ruling Nepali Congress (NC) could find its presence only in 23 HoR and 41 PA constituencies, followed by Rastriya Janata Party-Nepal (RJP-Nepal) that received 11 HoR and 16 PA seats.

While the independents proved their presence in 1 HoR constituency and 3 PA constituencies, 6 women candidates made it to HoR.

According to EC, the vote counting of both HoR and National Assembly has come to final stages with 164 parliamentary and 329 provincial representatives elected so far in the polls held for 165 parliamentary and 330 provincial seats.

PR Counting Underway

Overall, the left alliance won 116 of 165 FPTP seats for HoR and was leading the Proportional Representation (PR) count, held for 60 districts, for 110 seats.

Out of the 7,684,328 PR votes counted so far, “CPN-UML has so far secured 2,631,991 votes followed by NC (2,546,069), CPN-MC (1,045,446), Federal Socialist Forum Nepal (351,525) and the RJP-Nepal (295,448),” informed Nepal Election Commission (EC) Spokesperson Nawaraj Dhakal.

The PR vote counting is currently underway in around 17 districts and the final PR result is expected by December 15, 2017 evening.

Once the parties submit their HoR winners under PR category, EC will take the process ahead to President for further approval before making the list public.

Decline in Women Representatives

The number of directly-elected women to the HoR seats under the FPTP category has decreased this time as only 6 women candidates made it to HoR.

This number indicates a gradual decline in women representatives in Nepali elections over a period.

While the first Constituent Assembly (CA) elections in 2008 saw 30 women representatives, the number declined to 10 in 2013 CA elections, and now it has come down to 6.

This situation lies in contrast to the constitutional rules that recommend 33 percent women representatives in the House.

This time, only three parties including CPN-UML, CPN-MC and Rastriya Janamorcha the winning female candidates.

While UML had only 3 female winners in a total of 80 FPTP seats, CPN-MC also saw a similar number among its 36 total FPTP winners.

Meanwhile, the ruling NC party saw the failure of its 9 female candidates fielded for HoR seats.

Brainstorming Begins

With the results announced, now the winner leftist alliance is brainstorming on the formation of the new Nepali government with key discussions on power-sharing, among others.

According to the senior left leaders, KP Oli, UML Chairman and the next PM of Nepal (likely), and the MC Chairman Pushpa Kamal Dahal, also called Prachanda, are likely to hold discussions during December 14-15, 2017 over the formation of new government at the Center.

While some experts feel the formation of central government will be possible only after Assembly results, UML feels that the Assembly (Upper House) election will not be an issue and aims at the formation by the end of December 2017.

Following the formation, the President will call for the first Federal Parliament session under the new government, within 30 days of the declaration of final results of HoR as recommended by the Nepali Constitution.

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