KATHMANDU, May 25: A special committee formed by the Nepali Congress has said that it is appropriate to either readjust or suspend the Constituency Development Fund which was later renamed as Local Infrastructure Development Partnership Program.  

Terming the program ‘controversial’, the special committee led by its central working committee member Ram Sharan Mahat has concluded that the program should be either suspended or readjusted as part of the restructuring of public expenditure. 

Earlier on May 6, Nepali Congress had formed the 14-member special committee to study and analyze the economic impact of COVID-19 and submit a report to shape the view and stance of the party on the economy and the upcoming budget. The committee comprising former finance ministers, state finance ministers and former vice chairs of National Planning Commission, among others, submitted its report to the party’S President Sher Bahadur Deuba.

The committee in its report states that COVID-19 has offered an opportunity to increase expenditure efficiency, restrict unnecessary spending and adopt austerity measures. According to the report, the government should now implement the Public Expenditure Review Commission’s recommendations that include scrapping six ministries, 35 departments and nearly 45,000 government staffers.

In line with its recommendations to cut unnecessary spending, the special committee of the main opposition party has also called for the suspension or readjustment of the multi-billion pork barrel fund.

The government has allocated Rs 9.9 billion under this program to provide Rs 60 million for each constituency whereby each lawmaker receives direct funding for the development of their constituency. The program has been criticized by various sectors not only due to its distributive nature with questions about its economic returns but also due to rampant misuse of the money for the lack of proper monitoring. 

The report also underlines the need for prudent management of external debt and partnership. As the government could seek additional debt in 2020 due to falling revenue and grants, the special committee, in its report, said that there is a need to monitor whether such loans have been used for capital formation. The report also warns that Nepal’s debt obligation could go out of control if there is no proper homework on the source of debt, conditions and areas to mobilize the debt. 

The special committee has also said that the government should introduce a relief package for the businesses and people hit hard by the pandemic.

“A budget of Rs 1,350 billion to Rs 1,400  billion realistic”

Similarly, the special committee has said that the budget of Rs 1,350 billion to Rs 1,400 billion could be realistic for the upcoming fiscal year 2020/21. In terms of resources, the federal revenue after sharing with subnational governments could be Rs 850 billion to Rs 900 billion, according to the report. The committee sees a possibility for raising domestic debt of nearly Rs 200 billion and Rs 225 billion in external debt. In addition to foreign grants, the carryover from the surplus of the current fiscal year and overdraft from the central bank could help the government to come up with the budget.

 
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