Budget of Nepal 2079/80: An Overview
The budget of Nepal is an annual statement of the government's estimated revenue and expenditure for a fiscal year, which runs from mid-July to mid-July. The budget is prepared by the Ministry of Finance in consultation with various stakeholders, including other ministries, state and local governments, civil society, private sector, and development partners. The budget is presented by the Finance Minister to the federal parliament for approval, usually in late May or early June.
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The budget of Nepal is a crucial policy document that reflects the government's priorities, plans, and programs for achieving its vision of "Prosperous Nepal, Happy Nepali". The budget also serves as a tool for mobilizing and allocating resources, implementing policies, delivering public services, and ensuring accountability and transparency. The budget of Nepal 2079/80 (2021/22) was presented by Finance Minister Bishnu Prasad Paudel on May 29, 2021, amid the COVID-19 pandemic that has severely affected the health, social, and economic sectors of the country.
In this article, we will provide an overview of the budget of Nepal 2079/80, highlighting its main features, focus areas, strengths, challenges, and implications. We will also provide a link to download the full budget document in PDF format for further reference.
Introduction
The budget of Nepal 2079/80 (2021/22) has been prepared with the following objectives:
To achieve high and sustainable economic growth by developing a production-based economy.
To create employment and alleviate poverty through optimal utilization of available resources, labor force, capital, and technology.
To maintain financial discipline and aggregate economic stability by limiting inflation.
To establish federalism as a carrier of prosperity by transferring resources to state and local levels.
To create a base for balanced, inclusive, self-reliant, and socialism-oriented economy through socio-economic transformation.
The budget has also identified ten priority areas for achieving these objectives:
Transformation of agriculture sector
Enhancement of production and productivity, employment creation, and poverty elimination by coordination among government, private, and cooperative sectors
Innovation-based local economic development
Human resource development
Infrastructure development and capital formation
Hydroelectricity production, transmission line expansion, and rural electrification
Industrial development, investment promotion, and revival of tourism sector
Environment protection, disaster management, and climate change risk minimization
Efficient public service delivery and good governance promotion
Scientific research and development
The total size of the budget for FY 2079/80 is the largest ever in the history of Nepal, amounting to NPR 1,793.83 billion, which is 11.6 percent higher than the revised estimate of NPR 1,647.57 billion for FY 2078/79 (2020/21). The budget aims to achieve a GDP growth rate of 7 percent and an inflation rate of 6.5 percent for the next fiscal year. The budget also targets to increase the per capita income of Nepal to USD 1,381 from the current USD 1,191.
If you want to download the full budget document in PDF format, you can click on this link or visit the official website of the Ministry of Finance at www.mof.gov.np.
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Budget Highlights
Budget Size and Sources of Finance
The budget size for FY 2079/80 is NPR 1,793.83 billion, which is equivalent to 48.6 percent of the projected GDP. The budget consists of three components: current expenditure, capital expenditure, and financial management. The current expenditure is NPR 1,183.25 billion (65.9 percent of the total budget), the capital expenditure is NPR 380.38 billion (21.2 percent of the total budget), and the financial management is NPR 230.20 billion (12.8 percent of the total budget).
The sources of finance for the budget are mainly tax revenue, foreign grants, foreign loans, and internal loans. The tax revenue is estimated to be NPR 1,240.11 billion (69 percent of the total budget), the foreign grants are expected to be NPR 55.46 billion (3 percent of the total budget), the foreign loans are projected to be NPR 242.26 billion (13.5 percent of the total budget), and the internal loans are anticipated to be NPR 256 billion (14.3 percent of the total budget).
Budget Focus Areas
The budget has allocated resources to various sectors and programs according to its objectives and priorities. Some of the major focus areas of the budget are as follows:
COVID-19 pandemic response: The budget has allocated NPR 26.75 billion for COVID-19 prevention, control, and treatment, including vaccination, testing, isolation, quarantine, oxygen supply, ICU beds, ventilators, PPEs, and other medical equipment. The budget has also allocated NPR 4 billion for COVID-19 emergency fund and NPR 15 billion for COVID-19 response and recovery fund.
Agriculture sector transformation: The budget has allocated NPR 55.97 billion for agriculture sector development, including irrigation, mechanization, fertilizers, seeds, livestock, fisheries, agro-processing, organic farming, cooperatives, and insurance. The budget has also announced various subsidies and incentives for farmers and agro-entrepreneurs.
Employment creation and poverty alleviation: The budget has allocated NPR 11.60 billion for Prime Minister Employment Program (PMEP), which aims to provide at least 100 days of employment to every unemployed person in a year. The budget has also allocated NPR 5 billion for Youth Entrepreneurship Program (YEP), which provides interest subsidy and collateral-free loans to young entrepreneurs.
Local economic development: The budget has allocated NPR 429.83 billion for intergovernmental fiscal transfer to state and local governments, which is equivalent to 23.9 percent of the total budget. The budget has also allocated NPR 15 billion for local infrastructure development partnership program (LIDPP), which supports local governments to implement infrastructure projects in partnership with private sector and cooperatives.
Human resource development: The budget has allocated NPR 70.05 billion for education sector development, including technical education, digital learning, teacher training, scholarship, school infrastructure, and quality improvement. The budget has also allocated NPR 69.38 billion for health sector development, including free health check-up for people above 40 years of age, health insurance expansion, hospital construction and upgradation, and human resource development.
Infrastructure development and capital formation: The budget has allocated NPR 80 billion for national pride projects, which include strategic roads, railways, airports, hydropower, irrigation, and urban development. The budget has also allocated NPR 25 billion for special economic zone (SEZ) development, NPR 10 billion for land bank establishment, and NPR 5 billion for industrial estate development.
Hydroelectricity production, transmission line expansion, and rural electrification: The budget has allocated NPR 83.89 billion for energy sector development, including construction and operation of hydropower projects, transmission lines, distribution networks, and alternative energy sources. The budget has also announced various incentives and facilities for private sector investment in the energy sector.
Industrial development, investment promotion, and revival of tourism sector: The budget has allocated NPR 24.47 billion for industry, commerce, and supplies sector development, including establishment of industrial corridor, promotion of export-oriented industries, facilitation of foreign direct investment (FDI), and enhancement of trade facilitation and competitiveness. The budget has also allocated NPR 11.52 billion for tourism sector development, including construction and upgradation of tourism infrastructure, promotion of domestic and international tourism, and support to tourism entrepreneurs affected by COVID-19.
Environment protection, disaster management, and climate change risk minimization: The budget has allocated NPR 24.12 billion for forest and environment sector development, including conservation and management of forests, wildlife, biodiversity, wetlands, and protected areas. The budget has also allocated NPR 15.32 billion for disaster risk reduction and management, including early warning system, emergency response, reconstruction and rehabilitation, and climate change adaptation and mitigation.
Efficient public service delivery and good governance promotion: The budget has allocated NPR 41.83 billion for federal affairs and general administration sector development, including civil service reform, e-governance system, public procurement system, anti-corruption measures, and citizen charter implementation. The budget has also allocated NPR 37.35 billion for law and order maintenance, justice delivery, human rights protection, and peace process implementation.
Scientific research and development: The budget has allocated NPR 13.77 billion for science and technology sector development, including establishment of national science foundation, promotion of innovation and entrepreneurship ecosystem, support to research institutions and universities, and development of information and communication technology (ICT) infrastructure.
Budget Analysis
Strengths and Opportunities
The budget of Nepal 2079/80 has some positive aspects and potential benefits that can be summarized as follows:
The budget is ambitious and visionary in terms of its size, growth target, focus areas, and alignment with the national vision of "Prosperous Nepal, Happy Nepali". The budget reflects the government's commitment to achieve the Sustainable Development Goals (SDGs) by 2030 and graduate from the least developed country (LDC) status by 2026.
The budget is responsive and resilient in terms of its allocation for COVID-19 pandemic response and recovery. The budget prioritizes the health sector by increasing its allocation by 31.6 percent compared to the previous year. The budget also provides relief and support to the affected sectors and groups by increasing social security allowance, providing tax exemption and waiver, and extending the deadline for tax payment and filing. The budget also allocates funds for vaccination, emergency fund, and response and recovery fund to cope with the pandemic situation.
The budget is inclusive and equitable in terms of its allocation for social sectors and marginalized groups. The budget increases the allocation for education sector by 13.9 percent, health sector by 31.6 percent, and social security sector by 16.9 percent compared to the previous year. The budget also provides special provisions and programs for women, children, senior citizens, persons with disabilities, Dalits, indigenous people, Madhesis, Tharus, Muslims, and other disadvantaged groups.
The budget is supportive and facilitative in terms of its allocation for private sector development and investment promotion. The budget provides various incentives and facilities for domestic and foreign investors, such as tax rebate, customs duty exemption, land acquisition facilitation, one-stop service center, and dispute resolution mechanism. The budget also supports the industrial development, export promotion, and tourism revival by allocating funds for SEZ development, industrial corridor establishment, trade facilitation and competitiveness enhancement, and tourism infrastructure development and promotion.
The budget is progressive and transformative in terms of its allocation for innovation and technology development. The budget allocates funds for establishing national science foundation, promoting innovation and entrepreneurship ecosystem, supporting research institutions and universities, and developing ICT infrastructure. The budget also encourages digitalization of public service delivery, e-governance system, e-commerce platform, and e-learning system.
Challenges and Risks
The budget of Nepal 2079/80 also has some limitations and drawbacks that can be summarized as follows:
The budget is unrealistic and unfeasible in terms of its revenue projection and expenditure execution. The budget projects a revenue growth of 28 percent compared to the revised estimate of the previous year, which is highly optimistic given the low economic activity and tax compliance due to the pandemic. The budget also faces challenges in executing the planned expenditure due to the low absorptive capacity, weak institutional coordination, bureaucratic hurdles, political instability, and corruption.
The budget is unsustainable and unbalanced in terms of its fiscal deficit and debt management. The budget estimates a fiscal deficit of NPR 298.26 billion, which is equivalent to 8.1 percent of the projected GDP. The budget also anticipates a public debt of NPR 1,474.64 billion, which is equivalent to 40 percent of the projected GDP. The high fiscal deficit and debt pose risks to the macroeconomic stability and fiscal space of the country.
The budget is inadequate and insufficient in terms of its allocation for key sectors and programs. The budget allocates only 21.2 percent of the total budget for capital expenditure, which is lower than the international standard of 25 percent. The budget also allocates only 3.8 percent of the total budget for agriculture sector, which is the main source of livelihood for more than 60 percent of the population. The budget also allocates only 3.9 percent of the total budget for science and technology sector, which is crucial for innovation and competitiveness.
The budget is vague and ambiguous in terms of its implementation and monitoring mechanism. The budget does not provide clear and specific indicators, targets, and timelines for measuring the performance and impact of the budget programs and projects. The budget also does not specify the roles and responsibilities of different actors and stakeholders involved in the budget implementation and oversight.
The budget is uncertain and volatile in terms of its external and internal environment. The budget faces external risks such as the global economic slowdown, the COVID-19 pandemic, the geopolitical tensions, and the climate change impacts. The budget also faces internal risks such as the political instability, the social unrest, the security threats, and the natural disasters.
Conclusion
The budget of Nepal 2079/80 is a historic and unprecedented budget that aims to achieve high and sustainable economic growth, create employment and alleviate poverty, establish federalism as a carrier of prosperity, create a base for balanced, inclusive, self-reliant, and socialism-oriented economy, and respond to the COVID-19 pandemic and its impacts. The budget has allocated resources to various sectors and programs according to its objectives and priorities, highlighting some strengths and opportunities as well as some challenges and risks.
However, the budget is not an end in itself, but a means to an end. The success of the budget depends on how effectively and efficiently it is implemented and monitored. Therefore, it is imperative that the government, along with other stakeholders, such as state and local governments, private sector, civil society, development partners, media, and citizens, work together to ensure that the budget delivers its intended results and benefits to the people of Nepal.
We hope that this article has provided you with some useful information and insights about the budget of Nepal 2079/80. If you have any feedback or comments, please feel free to share them with us. Thank you for reading!
FAQs
Here are some frequently asked questions about the budget of Nepal 2079/80:
What is the total size of the budget of Nepal 2079/80?
The total size of the budget of Nepal 2079/80 is NPR 1,793.83 billion, which is equivalent to 48.6 percent of the projected GDP.
What are the main sources of finance for the budget of Nepal 2079/80?
The main sources of finance for the budget of Nepal 2079/80 are tax revenue (69 percent), foreign loans (13.5 percent), internal loans (14.3 percent), and foreign grants (3 percent).
What are the main focus areas of the budget of Nepal 2079/80?
The main focus areas of the budget of Nepal 2079/80 are COVID-19 pandemic response, agriculture sector transformation, employment creation and poverty alleviation, local economic development, human resource development, infrastructure development and capital formation, hydroelectricity production, transmission line expansion, and rural electrification, industrial development, investment promotion, and revival of tourism sector, environment protection, disaster management, and climate change risk minimization, efficient public service delivery and good governance promotion, and scientific research and development.
What are the strengths and opportunities of the budget of Nepal 2079/80?
The strengths and opportunities of the budget of Nepal 2079/80 are its ambitious and visionary nature, its responsive and resilient allocation for COVID-19 pandemic response and recovery, its inclusive and equitable allocation for social sectors and marginalized groups, its supportive and facilitative allocation for private sector development and investment promotion, and its progressive and transformative allocation for innovation and technology development.
What are the challenges and risks of the budget of Nepal 2079/80?
The challenges and risks of the budget of Nepal 2079/80 are its unrealistic and unfeasible revenue projection and expenditure execution, its unsustainable and unbalanced fiscal deficit and debt management, its inadequate and insufficient allocation for key sectors and programs, its vague and ambiguous implementation and monitoring mechanism, and its uncertain and volatile external and internal environment.
How can I download the full budget document in PDF format?
You can download the full budget document in PDF format by clicking on this link or visiting the official website of the Ministry of Finance at www.mof.gov.np.
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