The national budget presented by then Finance Minister Dr. Ram Sharan Mahat in this same week 29 years ago amounted to Rs. 69 billion, 69 crore, 33 lakh, and 37 thousand. The size of the budget presented in the joint session of Parliament at Singha Durbar on 26 Asar 2055 was Rs. 2 trillion, 54 billion, 64 crore, 66 lakh, and 63 thousand less than the budget for the upcoming fiscal year presented by Finance Minister Swarnim Wagle this past Jestha. For the coming year, Finance Minister Wagle presented a budget of Rs. 2 trillion, 124 billion, and 34 crore.

Even with high priority given to the private sector, the budget allocated for FY 2055/56, 29 years ago, did not reach even Rs. 100 billion. The budget estimated that foreign loans and grants would account for 35 percent. Finance Minister Mahat had estimated revenue collection of Rs. 34 billion, 11 crore, and 65 lakh for that fiscal year. The revenue mobilization target in the budget was ambitious.

The budget allocated Rs. 31 billion, 95 crore, and 21 lakh for recurrent expenditure and Rs. 37 billion, 74 crore, and 11 lakh for development expenditure. At that time, the development budget was about Rs. 5 billion, 79 crore more than recurrent expenditure. In the current budget, recurrent expenditure has surpassed development expenditure. The budget presented by Mahat had a deficit of Rs. 22 billion. Of the principal and interest payments, Rs. 9 billion, 10 crore was allocated under recurrent expenditure for interest payments at that time.

Mahat stated that the main reasons for the increase in recurrent expenditure were the significant depreciation of the Nepali currency against convertible foreign currencies in the current year, which increased the liability for external debt payments, grade benefits, and the management of the SAARC Summit. The budget mentioned working with the private sector to increase the export of carpets and ready-made garments. At that time, carpets and ready-made garments accounted for a large share of Nepal's export trade. The government had been providing subsidies for the transportation of iodized salt to 22 remote districts, but that budget announced subsidies not only for transportation but also for the salt itself. The budget introduced a policy for mobilizing resources of institutions such as the Employees Provident Fund and Insurance Corporation. To make export trade competitive, a refinancing arrangement was made for overseas exports. Such companies were allowed to purchase shares under the new policy.

The slogans “A clean and people-friendly government is my right” and “Development in every village, employment in every household” were adopted. The budget stated that, through government-level negotiations and coordination, at least 200 people from each parliamentary constituency would be provided opportunities for foreign employment.

With increased investment in agriculture, roads, electrification, and small irrigation, the budget was presented as one that would create employment. The budget announced the establishment of a Credit Information and Analysis Center. The budget introduced a new provision to abolish customs duties and collect a 1.5 percent fee at import points to be distributed to local bodies. The budget allocated Rs. 1 billion, 96 crore for VDC grants and Rs. 14 crore, 50 lakh for municipalities. The budget estimated value addition at 6.5 percent and gross domestic product growth at 11.9 percent.

Priority to Roads and Bridges

Compared to now, there were far fewer roads and bridges at that time. Many projects that had begun construction were incomplete. Therefore, the budget appeared to prioritize roads and bridges. The construction of 22 bridges on the Kohalpur–Mahakali section of the East-West Highway was given priority. These bridges served as lifelines for the western region. The budget prioritized the BP Highway, considered the shortest route connecting the eastern region, roads connecting district headquarters, and the upgrading of dilapidated roads. In the east, the Katari-Okhaldhunga road was prioritized, while in the west and far-western districts, many roads were given budgetary priority.

The Baglung–Beni Jomsom road was allocated a budget even then. Even after 29 years, this road has not been fully constructed. For every government, roads connecting district headquarters have been a priority. Plans to connect district headquarters by road have been a priority for all political parties as well. At that time, Rs. 6 billion, 38 crore was allocated for the transport sector, including aviation.

Priority to Increasing Private Sector Investment

The budget mainly adopted the principle of prioritizing increased private sector investment and export trade. To promote export growth, the budget set a policy not to raise the interest rate on required loans above 10 percent and for Nepal Rastra Bank to provide refinancing at rates up to 7 percent.

The policy was to provide exporters with foreign currency loans from domestic banks and to provide loans for imported raw materials needed for domestic production at the same interest rate as for importers. The budget stated that special incentives would be given to attract private companies to sectors such as international-standard hospitals, medical and engineering campuses, polytechnic and technical institutes, highway cable cars, telecommunications, energy, and air transport. The current large private sector investment in these areas is considered to be based on the policies of that time. The budget introduced policy reforms to create a conducive environment for strengthening the stock market, and it was more focused on an open market economy. This policy has continued to the present day.