Mid-Term review of budget
Government slashes economic growth target
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KATHMANDU, JAN 26 -
The government has revised its economic growth target for the current fiscal year to 4.5 percent, down from the earlier 5 percent in this year’s budget despite good harvest of cereals.
The government cut down the growth projection this year amid projection of a slower growth in the non-agriculture sector.
“We expect that the agriculture sector will grow by 4.75 percent and the non-agriculture sector by 4.25 percent, based on their current performance,” said Finance Minister Barsa Man Pun on Wednesday. He was releasing the mid-term review of the budget.
According to the Ministry of Agriculture, the output of major summer crops went up by 10.78 percent this year. The country also witnessed bumper paddy harvest this year.
Paddy producion rose impressively by 13.7 percent to 5.072 million tons, while maize production surged by 5.4 percent, millet 4.1 percent and buckwheat 13.3 percent.
The government is confident that inflation will remain between 7-8 percent. Amid concerns about a possible rise in inflation to double digits due to the recent hike in prices of petroleum products, Nepal Rastra Bank Governor Yubaraj Khatiwada said double digit inflation was unlikely due to heavy downturn in food inflation in India. Food inflation in India turned negative recently. Food inflation came down below the level of non-food items for the first time after several years in Nepal, too, as of both four and five months of the current fiscal year, according to the NRB.
As of the first five months of the current fiscal year, inflation stood at 8.2 percent. This year’s budget had targeted to tame inflation at 7 percent, down from the 9.6 percent maintained last year.
Although capital expenditure has not been impressive, this year saw a relatively better expenditure in the first six months as compared to the same period of the preceding three years, according to the Finance Ministry.
Capital expenditure this year stood at Rs 9.56 billion, which is 13.17 percent of the total capital expenditure. In the FY 2008-09, capital expenditure was 8.23 percent. It was 9.16 percent in the FY 2009-10 and 6.22 percent in 2010-11 during the review period.
The previous three years were affected by political instability, which resulted in either delayed presentation of the annual budget or delayed endorsement, affecting capital expenditure.
Pun termed the progress this year positive. “On the basis of the trend of expenditure in the review period, the capital expenditure is expected to remain at 90 percent this year,” he said.
With regard to revenue collection, the ministry said the government collected Rs 111 billion as of the six months, which is 98.32 percent of the target.
“On the basis of the trend of revenue collection in the review period, the target is likely to be met this year,” Pun said. The government had failed to meet the target by Rs 16 billion last fiscal year.
Posted on: 2012-01-26 09:03
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