Nepal's Economic and Social Transformation: Budget 2079/80 (2022/23) Highlights and Recommendations
Budget of Nepal 2079/80: An Overview
The budget of Nepal is an annual statement of the government's estimated revenue and expenditure for a fiscal year, which runs from mid-July to mid-July. The budget is prepared by the Ministry of Finance in consultation with various stakeholders, including other ministries, state and local governments, civil society, private sector, and development partners. The budget is presented by the Finance Minister to the federal parliament for approval, usually in late May or early June.
The budget of Nepal is a crucial policy document that reflects the government's priorities, plans, and programs for achieving its vision of "Prosperous Nepal, Happy Nepali". The budget also serves as a tool for mobilizing and allocating resources, implementing policies, delivering public services, and ensuring accountability and transparency. The budget of Nepal 2079/80 (2021/22) was presented by Finance Minister Bishnu Prasad Paudel on May 29, 2021, amid the COVID-19 pandemic that has severely affected the health, social, and economic sectors of the country.
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In this article, we will provide an overview of the budget of Nepal 2079/80, highlighting its main features, focus areas, strengths, challenges, and implications. We will also provide a link to download the full budget document in PDF format for further reference.
The budget of Nepal 2079/80 (2021/22) has been prepared with the following objectives:
To achieve high and sustainable economic growth by developing a production-based economy.
To create employment and alleviate poverty through optimal utilization of available resources, labor force, capital, and technology.
To maintain financial discipline and aggregate economic stability by limiting inflation.
To establish federalism as a carrier of prosperity by transferring resources to state and local levels.
To create a base for balanced, inclusive, self-reliant, and socialism-oriented economy through socio-economic transformation.
The budget has also identified ten priority areas for achieving these objectives:
Transformation of agriculture sector
Enhancement of production and productivity, employment creation, and poverty elimination by coordination among government, private, and cooperative sectors
Innovation-based local economic development
Human resource development
Infrastructure development and capital formation
Hydroelectricity production, transmission line expansion, and rural electrification
Industrial development, investment promotion, and revival of tourism sector
Environment protection, disaster management, and climate change risk minimization
Efficient public service delivery and good governance promotion
Scientific research and development
The total size of the budget for FY 2079/80 is the largest ever in the history of Nepal, amounting to NPR 1,793.83 billion, which is 11.6 percent higher than the revised estimate of NPR 1,647.57 billion for FY 2078/79 (2020/21). The budget aims to achieve a GDP growth rate of 7 percent and an inflation rate of 6.5 percent for the next fiscal year. The budget also targets to increase the per capita income of Nepal to USD 1,381 from the current USD 1,191.
If you want to download the full budget document in PDF format, you can click on this link or visit the official website of the Ministry of Finance at www.mof.gov.np.
Budget Size and Sources of Finance
The budget size for FY 2079/80 is NPR 1,793.83 billion, which is equivalent to 48.6 percent of the projected GDP. The budget consists of three components: current expenditure, capital expenditure, and financial management. The current expenditure is NPR 1,183.25 billion (65.9 percent of the total budget), the capital expenditure is NPR 380.38 billion (21.2 percent of the total budget), and the financial management is NPR 230.20 billion (12.8 percent of the total budget).
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The sources of finance for the budget are mainly tax revenue, foreign grants, foreign loans, and internal loans. The tax revenue is estimated to be NPR 1,240.11 billion (69 percent of the total budget), the foreign grants are expected to be NPR 55.46 billion (3 percent of the total budget), the foreign loans are projected to be NPR 242.26 billion (13.5 percent of the total budget), and the internal loans are anticipated to be NPR 256 billion (14.3 percent of the total budget).
Budget Focus Areas
The budget has allocated resources to various sectors and programs according to its objectives and priorities. Some of the major focus areas of the budget are as follows:
COVID-19 pandemic response: The budget has allocated NPR 26.75 billion for COVID-19 prevention, control, and treatment, including vaccination, testing, isolation, quarantine, oxygen supply, ICU beds, ventilators, PPEs, and other medical equipment. The budget has also allocated NPR 4 billion for COVID-19 emergency fund and NPR 15 billion for COVID-19 response and recovery fund.
Agriculture sector transformation: The budget has allocated NPR 55.97 billion for agriculture sector development, including irrigation, mechanization, fertilizers, seeds, livestock, fisheries, agro-processing, organic farming, cooperatives, and insurance. The budget has also announced various subsidies and incentives for farmers and agro-entrepreneurs.
Employment creation and poverty alleviation: The budget has allocated NPR 11.60 billion for Prime Minister Employment Program (PMEP), which aims to provide at least 100 days of employment to every unemployed person in a year. The budget has also allocated NPR 5 billion for Youth Entrepreneurship Program (YEP), which provides interest subsidy and collateral-free loans to young entrepreneurs.
Local economic development: The budget has allocated NPR 429.83 billion for intergovernmental fiscal transfer to state and local governments, which is equivalent to 23.9 percent of the total budget. The budget has also allocated NPR 15 billion for local infrastructure development partnership program (LIDPP), which supports local governments to implement infrastructure projects in partnership with private sector and cooperatives.
Human resource development: The budget has allocated NPR 70.05 billion for education sector development, including technical education, digital learning, teacher training, scholarship, school infrastructure, and quality improvement. The budget has also allocated NPR 69.38 billion for health sector development, including free health check-up for people above 40 years of age, health insurance expansion, hospital construction and upgradation, and human resource development.
Infrastructure development and capital formation: The budget has allocated NPR 80 billion for national pride projects, which include strategic roads, railways, airports, hydropower, irrigation, and urban development. The budget has also allocated NPR 25 billion for special economic zone (SEZ) development, NPR 10 billion for land bank establishment, and NPR 5 billion for industrial estate development.
Hydroelectricity production, transmission line expansion, and rural electrification: The budget has allocated NPR 83.89 billion for energy sector development, including construction and operation of hydropower projects, transmission lines, distribution networks, and alternative energy sources. The budget has also announced various incentives and facilities for private sector investment in the energy sector.
Industrial development, investment promotion, and revival of tourism sector: The budget has allocated NPR 24.47 billion for industry, commerce, and supplies sector development, including establishment of industrial