"MoF has started discussions for budget preparation in a changed priority situation. We, however, are awaiting need assessment from the affected districts," Ram Sharan Pudasaini, spokesperson of MoF, told Republica.
Post-Disaster Need Assessment (PDNA) works are underway under the leadership of National Planning Commission (NPC). But officials say it would take some time to submit its report. The finance ministry plans to devise income and expenditure plans for the upcoming year based on PDNA reports. Officials say PDNA works will not be completed before June 15.On top of this, foreign donors and international community have not made any assistance in national reconstruction fund of Rs 200 billion which was formed three weeks ago for reconstruction works. "We will be able to devise budget plan only after they respond to our appeal," said Pudasaini.
New estimates say the reconstruction cost will go well over Rs 1,000 billion depending on the gravity of damage in public infrastructures including schools and health post, among others.
After collecting data of PDNA, the government has planned to call a meeting with international donors to seek their support for rebuilding of infrastructures.
"Our focus is on devising programs for reconstruction in affected districts," Baikuntha Aryal, chief of budget division of the Ministry of Finance, said. "We will curb scattered spending and unnecessary expenditures and adopt austerity measures to keep focus on reconstruction works."
The size of the budget is generally determined by revenue collection. But revenue collection is expected to slow this year as economic activities have been badly hit by the earthquake. Officials estimate revenue would fall short of targeted Rs 512 billion by around Rs 50 billion.
The government aims to fill resources gap by collecting internal and external burrowing as country's Debt to GDP Ratio is only 30 percent currently which was above 50 percent a decade ago. "We can collect internal and external debt as per the requirement," said Aryal.
Internal debt for this fiscal year has been capped at 2.4 percent of GDP. The government plan was to limit such debt to 3 percent of GDP in the next fiscal year.
Officials say such borrowing now could go up to 5 percent of GDP. The government can also mobilize resources by issuing bonds. "But we should not allow such borrowing to distort the market," MoF officials said.
Officials also plan to use unspent amount from this fiscal year for budget being prepared for reconstruction.
Aryal said the budget will be ready within few days of the donors meeting which is scheduled for mid-June.
The plan before the earthquake was to table a budget of Rs 735 billion for the coming fiscal year.
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