March 15: Finance Secretary Toyam Raya has warned that the problems seen in the country's economy is likely to increase from the next year.

He made such remark on Tuesday during a discussion held at the National Concern and Coordination Committee of the National Assembly on the topic of government’s budget estimate.

 Secretary Raya said that the mandatory obligations of the government are increasing while there problems in revenue collection.

According to him, the financial system of the government has been affected due to the import ban.

“Because we are not in favour of increasing imports, the situation seems unlikely to ease even during next year,” said Raya.

He added that interest rates have increased significantly at the international level.

“It affects most of the activities. After the revenue is affected, the remaining options include raising internal and external loans. But foreign loans also have their own limits. Even if we want to, in some cases we cannot even get foreign loans,” added Raya.

Now the interest rate of domestic loans has reached about 12 percent. This year, the government to need Rs 43 billion just to pay the interest on public debt.

The government's obligation for grants under various headings is also increasing. However, the Ministry of Agriculture and Livestock Development reduced the subsidy on chemical fertilizers on Monday. Raya argues that this will bring some relief to the government.

The government took such measures after the price of fertilizers increased at the international level.

This year, the government has allocated Rs 7.5 billion for health insurance. However, now some hospitals are complaining that the government has not yet refunded them saying it does not have money to pay them.

Despite the pressure on payments, the Ministry of Finance made it clear that there is no plan to close the health insurance program. According to Finance Secretary Raya, the initial estimate for health insurance is Rs 20 billion this year.

“Nepal needs a budget of more than Rs 2100 billion annually in the present situation. However, there is shortage of resources," said Finance Secretary Raya. The budget of Rs 1700 billion for the current fiscal year has been reduced to Rs 1500 billion. Raya said that there is also a problem of securing resources for the revised budget.

According to him, there will be no problem in paying salaries to the government employees until the end of the current fiscal year. However, if austerity measures are not taken, it will be difficult to pay the salary in the future.

Finance Secretary Raya has said that the government will prioritize budget implementation method for the next fiscal year.

Raya stated that Nepal is in the process of becoming a developed country from an underdeveloped country by 2026 and some foreign subsidies will be cut after the country’s graduation from LDC. He said that after 2026, subsidies will be cut if the projects cannot be completed on time and there shall be a situation where the foreign aid subsidy will be withdrawn and the government must spend the amount from its own resources.