“We have received the EC´s demand for Rs 10 billion for holding the fresh CA elections,” confirmed Rajan Khanal, spokesperson at the Ministry of Finance (MoF). [break]
Though he did not elaborate, sources said the EC has estimated its requirements based on the assumption that the fresh election will be no different from the previous one in terms of logistics and other arrangements.
Top MoF officials said that the EC demand has meant severe pressure on the ministry to arrange the additional funds. The National Planning Commission (NPC) that capped the size of the budget for 2012/13 at Rs 429.60 billion after calculating all the fund sources had not included the cost of elections.
The ceiling was set after calculating the optimum amount of funds that the government could realistically mobilize in the new fiscal year from different sources including revenue, foreign loans and grants and domestic borrowing.
“Despite the ceiling, funding demands from different ministries had totaled well over Rs 500 billion. After a series of tough negotiations, we had barely managed to bring the demands of a majority of ministries within the ceiling. Now the EC´s demand has compelled us to negotiate further cuts,” said a source.
Officials from other ministries, aware of MoF´s quandry, have exerted pressure on it to increase the size of the budget over what the NPC has recommended, so that late-finalized programs could be continued. But MoF officials ruled out such a possibility. “We simply have no strong enough sources for that,” said the official.
In order to manage the funds, MoF is preparing to knock on donor doors and explore yet again the possibilities of additional pledges. “We will approach them as soon as the political leadership has a clear picture how to go about it,” said the source.
However, sources said even if the donors respond generously MoF would still need to arrange a few billion rupees from local sources, meaning it would further cut allocations for development projects.
“It will be a tough task,” said the source. “We cannot lower allocations for national pride projects such as the fast-track and mid-hills highways and the Sikta irrigation project. This will in effective force us to say no to new projects,” he added.
MoF was already struggling to manage adequate funds, mainly as it also needed to allocate a compulsory budget of around Rs 3.50 billion to settle the (second tranche) payment for rehabilitated UCPN (Maoist) combatants.
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