In the past three years since the promulgation of interim constitution and the election of Constituent Assembly (CA), none of the successive governments could bring the budget through the normal parliamentary procedure.
The cumulative effect has been quite dramatic.
First, the country, in the last two years, fell into the trap of Balance of Payment (BoP) crisis. From a comfortable BoP surplus, Nepal has now been compelled to witness the falling BoP deficit month after month.
The soaring trade deficit has coincided with the double-digit inflation.
And, in recent months the nagging pain of liquidity scarcity has become full-blown crunch even as the government struggles to spend its development funds.
As liquidity problem engulfed development banks and finance companies, the bankers had said that normal budget on time had become a must.
“The liquidity problem cannot be solved fully without the budget,” Ashok Rana, president of Nepal Bankers’ Association (NBA) had said.
Last year, the opposition Maoists had prevented then government from presenting budget at the parliament stating that the lame duck government cannot do so even as rounds and rounds of election to choose a new prime minister had failed.
This year, too, politically, the status of the government is caretaker since Prime Minister Jhalnath Khanal has already signed an understanding to resign.
But this year the opposition Nepali Congress (NC) has agreed to let the government present budget provided it does not pursue populist and partisan line.
Last week, Deputy Prime Minister and Finance Minister Bharat Mohan Adhikary tabled the principles and priorities of the budget at the parliament.
He has mainly focused on creating environment conducive to increasing production and investment.
In the immediate term, the budget would also need to help the central bank in dealing with the liquidity problem.
“The budget also needs to address the burning issue of recession in real estate sector where tens of billions of rupees of banks and financial institutions have been trapped,” said a banker, adding, “That is where the root cause of liquidity crunch lies.”
As per the rules, the principles and priorities of the budget has to be tabled at the parliament at least 15 days before presenting the annual budget.
Officials plan to unveil the budget for the fiscal year 2011/12 on July 14 before which the president will present the policies and programs of the government on July 3.