Finance Minister's dilemma

He is faced with the challenge of bringing the economy into a rhythm by increasing revenue collection and increasing capital expenditure and controlling current expenditure while political corruption, financial mismanagement, revenue leakage, and delays are rampant. The growth rate of industry, construction and trade sector is negative. Even though the interest rate has continuously decreased, if the lending has not increased, the money that can be loaned has accumulated in the bank. The morale of the private sector towards the government has decreased due to not creating a favorable environment for investment expansion. At such a time, it is the responsibility of the Ministry of Finance to increase the confidence of the private sector by increasing government spending while maintaining financial discipline.

Paudel's previous four tenures as finance minister were not considered successful, but he has not left the place to blame them as bad. Economists argue that this term of his, who is known as the finance minister who listens to the problems of the private sector, is also challenging. As of the last day (Monday) of the current financial year, the government's finances are at a loss of 3.5 billion rupees. Compared to last year, the government has set a target of collecting revenue of 14 trillion 22 billion this year by 41 percent, but has collected only 72 percent of the target or 10 trillion 30 billion rupees. During the same period, the total expenditure of the government is 14 trillion 8 billion 98 crore rupees. In this way, until the end of the financial year, the expenditure (expenditure) of the government is 3 trillion 52 billion rupees more than the income.

The outgoing government's Finance Minister Varshman Pun has announced the budget for the coming year. Paudel is obliged to implement the budget brought by Pun from the day after assuming the office of Finance Minister. Even though it was brought by its own coalition government, the newly appointed Prime Minister KP Sharma Oli and Finance Minister Paudel himself have been arguing that the upcoming budget cannot solve the existing problems of the economy and make the economy sustainable. Finance Minister Paudel has been implementing the same budget since Tuesday.

Government agencies have continued this year to spend large amounts of money and transfer money against the rules towards the end of the financial year. This year, till the end of June, 2.5 trillion rupees have been spent. Public Accounts Committee, Finance Committee and Auditor General's Office of the Parliament are raising questions against the trend of spending against the law, but the ministries are spending against the law despite suggestions for improvement. Poudel also has the responsibility of controlling such problems and making the government finances healthy.

Last year, the lowest revenue collection in 52 years. After the foreign exchange reserves continued to decline, the government imposed a ban on the import of some luxury goods to prevent further decline. Imports fell after policy tightening. Due to decrease in imports, the growth rate of revenue was negative that year. The government has increased the revenue by an average of 10 percent this year compared to the same situation. Outgoing finance minister Pun had promised to increase tax collection by 10 percent as soon as he became the finance minister. His commitment was limited to speeches. The new finance minister also faces the challenge of increasing revenue. In recent years, the revenue leakage has increased.

The challenge for the new finance minister is to increase revenue collection by making customs checkpoints, police administration, tax administration, etc. efficient and controlling leakages. Ram Prasad Gyawali, Head of the Central Department of Economics, Tribhuvan University, said that the government can increase revenue by controlling leakages in the tax administration sector. "In the past, the government increased the tax rates, which led to smuggling or black market. Due to this reason, the revenue received from customs was 100% affected. Along with this, value added tax (VAT), excise duty, income tax also decreased. Before that, 60 percent of VAT, 30 percent of excise duty and some income tax was collected from the customs point," he said, "Now the finance minister can stop theft, smuggling and leakage. Gyawali said that since there are leakages in both personnel administration and industrial business under the customs administration, Gyawali said that the main challenge of the new finance minister is to control them. "In the case of controlling leakages, revenue is only 17 percent of the current GDP ratio, this ratio can be easily increased," he added.

Gyawali said that the current basic problem is the decline in investment and the new finance minister should take steps to increase it. "When government and private sector investment decreases, the investment of the economy as a whole decreases. This trend has been continuing for the last 6/7 years," he said. "To stop this trend, the government also had to increase investment and encourage the private sector." There is a negative growth in the construction and manufacturing sector. It affects all economies. He suggested that the government should take initiatives to expand investment in the productive sector by giving concessions to encourage these sectors or through some other policy. The current situation is not due to high interest rates, but due to lack of commercial confidence. There is a situation where investors are fleeing,' he said, 'This situation should be addressed by the government as soon as possible.' There is sufficient investable funds in banks and financial institutions. Remittances are continuously increasing. Although these indicators of the external and financial sectors give the government an opportunity to spend, it needs to work very hard to improve the distortions of the sector, including reforms in personnel administration, policy corruption and mismanagement.

Another challenge of Finance Minister Paudel, who is loved by the private sector, is to elect the chairman of the Nepal Securities Board. Due to selfishness and controversy, the government has not been able to appoint the Chairman of the Securities Board, which has been vacant since January 20. The dispute over the appointment of the board chairman is also considered to be one of the main factors behind the breakup of the old alliance and the formation of a new one. Economist Keshav Acharya said that the new finance minister should immediately increase capital expenditure to make the sluggish economy viable.

'There is no need to do big work, we had to raise resources and increase the expenditure in the productive sector,' he said, 'due to the unstable policy of the government, the private sector is afraid of the government. Now the new government had to express an all-party commitment that the tax rates and economic policies will not change for at least 5/7 years. Even now there are more than two dozen projects of national pride. Neither sufficient budget has been allocated to those projects nor have the works been completed on time. Acharya said that now the government should arrange everything including the budget to complete at least 2/3 of the projects before the 084 elections.

Singha Durbar trip is not new for Paudel. This is the eighth ministerial position for Paudel, who is also the vice president of UML. Previously, he held the Ministry of Finance four times. He became Finance Minister for the first time in October 072 and for the second time in October 077. Similarly, Paudel, who became the finance minister with the deputy prime minister for the third time in June 078, and for the fourth time in December 079, became the finance minister with the deputy prime minister this time as well.

Paudel initially became the Minister of Youth, Sports and Culture from 053 Chait 12 to 054 Oct 10. From August 5, 1965 to June 7, 1966, he became a minister for the second time and held the Ministry of Water Resources. At that time, Pushpa Kamal Dahal became the Prime Minister for the first time. Similarly, Paudel was the defense minister in the cabinet formed in 067 under the leadership of Jhalnath Khanal. At that time, Paudel held the Ministry of Defense from 03 March 1967 to 11 August 1968. After that, Poudel, who became a minister for five more times, held only the Ministry of Finance each time.

While assuming office on Monday, Deputy Prime Minister and Finance Minister Paudel said that the budget brought by the previous government will not be an obstacle to implement the thinking and vision of the newly formed government. He opined that if there is any problem in the implementation of the budget, it can be amended procedurally.

'Budget does not become an obstacle to implement the government's thinking and approach. If there is an obstacle, there are legal and constitutional provisions on how to remove it. Accordingly, we will proceed with the revision process," he said. Finance Minister Poudel has approved a roadmap for using new tools and methods to meet the development finance deficit and increase investment in infrastructure.