Nepal's Budgetary Exercise During the Nineties: An Assessment

Abstract

Budgetary policies of His Majesty's Government of Nepal (HMG/N) during the Nineties were directed towards economic liberalization, privatization, poverty reduction and decentralization. Policies and programs of the budget during the Nineties were essentially concerned with agriculture modernization, employment promotion, women empowerment, financial sector reform, government expenditure management, tax reform, good governance, social service and the development of basic and physical infrastructure. The budgetary policy measures adopted by the first two budgets deserve appreciation at least in terms of the direction towards liberalization though they were still inadequate in terms of achieving the desired results. Budgetary analysis reveals that HMG/N spent regular expenditure as budgeted but development expenditure and revenue lagged behind the targets. This is a gloomy fiscal scenario-- low development expenditure, high regular expenditure, low revenue collection and high fiscal deficit with high foreign loan inflows. So far, the donors have provided loans at concessional interest rates and with high gestation period. But, we can not expect the same situation to continue in the coming years in the changing world scenario where there is drying up of the flows of foreign aid and the donors are reluctant to provide concessional loans. Hence, managing national budget has become increasingly challenging for HMG/N despite its sole objective of poverty alleviation.