Nepal faces ‘budget holiday’ from Wednesday midnight

Published On: September 15, 2021 08:30 PM NPT By: Republica  | @RepublicaNepal

The country is in a financial deadlock after the government failed to get the substitution bill endorsed by parliament

KATHMANDU, September 15: The country is facing a ‘budget holiday’ from Wednesday mid-night with the government undergoing a logjam to spend money from the state coffers for being unable to get the ordinance budget endorsed by parliament within the deadline.

Bishnu Poudel, the then Finance Minister of the KP Oli-led government, announced the annual budget for 2021/22 on May 29 through an ordinance. According to the law, the government needs to endorse an ordinance from parliament within 60 days, which is ending on Wednesday.

Targeting to revise the ordinance budget, Finance Minister Janardan Sharma tabled a substitution bill at parliament last Friday. However, the Sher Bahadur Deuba-led government has failed to receive parliament’s approval for the same till date. This is the first time that the country is facing a budget holiday after Nepal adopted the federal system. 

Experts said that the inability to receive approval for the ordinance budget has now tied the hands of the government on spending money. According to former finance secretary Shanta Raj Subedi, it would disrupt the spending on most of the regular expenses including the payment of salaries to the civil servants. But the high level dignitaries including President and heads of constitutional organs, among others, who are paid from the reserve fund of the state coffers, will be receiving their regular payments.       

The government has downsized the budget amount from Rs 1.64 trillion to Rs 1.63 trillion. However, the budget will be put on hold until the government receives parliamentary approval or enacts another ordinance to use the state funds. 

On Tuesday, a meeting of the House of Representatives was adjourned for a week, until September 20, after discussions on the substitution bill on the budget, amid disruption by CPN-UML lawmakers. It means the government has to wait for a few more days even to go through the parliamentary process.

The deadlock will also affect the release of funds under the relief package announced by the government. Similarly, it will also hit the disbursement of funds required for development projects. At the time when two months of the current fiscal year have already been wasted due to delay in budget endorsement, it will further affect the country’s spending on capital goods. Economists said it will hit income generation, employment and money supply in the economy.

Although the current situation restricts the government from spending the funds, it will not hamper the government in collecting taxes. According to the law, the government can generate the tax revenue even when the Finance Bill is under purview of parliament. 



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