Bagmati Province Budget Expected to Shrink Significantly for Upcoming Fiscal Year

Makwanpur. The Bagmati Province government has initiated the budget formulation process for the upcoming fiscal year. The Ministry of Economic Affairs and Planning under the provincial government has started estimating resources and evaluating for budget preparation.

The Provincial Government's Budget Resource Management Committee, in a meeting held on Tuesday, reviewed the current economic status of the province and determined the potential size and resource allocation for the next year's budget.

The committee, led by Minister for Economic Affairs and Planning Prabhat Tamang, includes the ministry's Acting Secretary Numananda Adhikari and the Chief of the Budget Division and Director from Nepal Rastra Bank as members. The committee meeting identified and determined the resources for the next fiscal year's budget based on the revenue collection status of the current fiscal year.

According to Minister Tamang, the budget for the upcoming fiscal year is likely to be significantly smaller compared to the current fiscal year. According to the committee's evaluation, the budget for the next year is estimated to decrease by approximately 17 billion rupees (25.89 percent) compared to the current fiscal year.

Minister Tamang stated that resource estimation for the upcoming fiscal year is being prepared for a budget around 50 billion rupees.

Although the government has set a base size of 47 billion rupees, it is reported that the budget ceiling could reach up to 50 billion rupees with the inclusion of some essential and additional programs. Minister Tamang mentioned that the provincial government, which brought a budget of 67.47 billion rupees in the current fiscal year, is not in a position to bring a budget exceeding 50 billion rupees in the next year.

As a source for the budget, the provincial government estimates receiving 30.89 billion rupees from shared revenue, which is more than 50 percent of the total budget.

Minister Tamang also indicated that the amount received from federal grants is expected to decrease in the upcoming budget. According to him, an estimated 13.81 billion rupees is expected to be received from various titles of grants provided by the federal government in accordance with the provisions of the constitution.

Minister Tamang stated that the province government's internal income share is 4.12 billion rupees of the total budget. He added that the budget size is shrinking because there will be a cash surplus of 5 billion rupees remaining after the implementation of the current fiscal year's budget.

Minister Tamang clarified that in the past, the budget size was larger because the cash surplus was also higher, but in the coming year, the cash surplus is also expected to decrease.

Minister Tamang stated that the revenue collection has been directly affected by factors such as the 'Genji' movement, pressure from disaster management, and elections. Furthermore, he noted that the continuous reduction in grants received from the federal government has added a major challenge to the province's budget formulation.

He also mentioned that the situation has led to further contraction in available resources because the provincial government has to return more than 2 billion rupees of unspent grant money to the federal government.

'The limited resources we have and the current economic indicators do not permit a budget larger than 50 billion rupees. Therefore, the budget for the next year will be realistic and focused on priorities,' Minister Tamang said, 'Based on the data and guidelines, various ministries of the province will now prepare the framework for their respective plans and programs.'

He stated that the provincial government needs to focus on expenditure cuts and production-oriented programs at a time when meeting revenue collection targets is becoming difficult.

Tamang informed that the provincial government is preparing to send ceilings to the ministries within a few days for the formulation of the next fiscal year's budget. He added that homework is being done on which sectors to reduce as the ceilings for the ministries will also decrease.

He also informed that the Ministry of Economic Affairs and Planning is preparing to correspond with the departmental ministries, including the budget formulation guidelines, to make the budget for the upcoming fiscal year systematic and effective.