Nepali Times
Economic Sense
Everybody says ho-hum


Amorose Beed sat staring at his computer screen, wondering what on earth one could write after the finance minister had droned his budget speech. Aha! Turn in last year's column. On second thoughts, the better solution might be to leave a blank space on p.8, where worthy readers are used to genteel discussion on matters economic.

Of course, these were only the dreamy workings of a mind affected by the same overwhelming lassitude and petty deception our Money Men (they are all men) in government seem to suffer from. Our parliamentarians present at the festivities seemed either disinterested or restless. The annual fete has come and gone, leaving the economy to pretty much fend for itself. No doubt the rituals on analysing and commenting on the budget will be well underway by the time the Beed makes his weekly appearance. So, methinks, one must instead examine more fundamental issues, ask what the philosophy behind our budgets are.

The first, and most basic questions-Who believes in the budget? To what end is it prepared? The experience of a decade of making and presenting budgets, instead of sharpening our planning skills, has been so devoid of lessons that the document is now losing its credibility. The budget has become little more than a compilation, a steady twitter of numbers with interludes of percentages. And what appears to be deception. New budget allocations are announced in manner that bespeaks definite increase over the previous year's estimates. The reality of these numbers is often different. For example, the finance minister said that this year's allocation for irrigation-Rs 4.89 billion represents a 20.4 percent increase over last year's estimated actual. In fact, the amount budgeted for the irrigation sector is less than last year's budget allocation of Rs 4.94 billion. These tiresome discrepancies need to be explained.

The purpose of the budget is also elusive. The document is once again a grab-bag of promises of regulatory measures and reforms-all to be put into effect through legislation. Do we really need to draw any more attention to how many days parliament meets in this country and how many laws it passes each year? Given this, what can one say about a budget that shifts the responsibility for formalisation of its contents on to a virtually legislature. The budget shares with the government of the day the unpleasant whiff of mediocrity, in terms of commitment.

We have learnt that one year is too short to deliver much. It is time we adopted a system of rolling plans with a three-year perspective. The budget document should stop resembling election manifestos and only talk about objectives it can meet. There is no point talking about poverty alleviation programs that the budget cannot even kick-start. It is not necessary for the budget speech to be long to demonstrate that the government has lots of things in mind. How about, instead, focusing on critical issues that can be implemented.

There is something to worry about related to this year's budget-the mix of regular to development expenditure. We must take note of the repeated recommendations to privatise and end the dole to state-owned enterprises. And the government must bow out of areas it has no business being in, like the power sector. It is ridiculous to see over Rs 9 billion allocated to the power sector, and only Rs 3.5 billion to the education sector. What are the government's priorities?
As for revenues, we live for the day when the budget will actually be met. Everyone agrees that the problems in interpreting and implementing the tax laws in Nepal are as diverse and various as the nation itself. As long as no link is recognised between the assets one holds and the income one reports making, no tax laws will be successful.

Countries never plan to fail, but they generally fail if they fail to plan. The planning process needs to wake up to this. Budgets are not inherently "good" or "bad"-we need to start evaluating budgets on whether or not they work and are credible.

(11 JAN 2013 - 17 JAN 2013)