March 6: The political instability in the country has posed a threat to the next year's budget preparation as well as the implementation of the current fiscal year's budget.

Prime Minister Pushpa Kamal Dahal has reshuffled the cabinet after breaking the alliance with the Nepali Congress and forged a new coalition with the CPN-UML,   Rashtriya Swatantra Party (RSP), and Janata Samajwadi Party (JSP).

With the new parties joining the government, there is a heightened risk that the priorities, principles, policies and programs of the government will be changed and the current budget will not get prioritiy.

Outgoing Minister for Finance Dr Prakash Sharan Mahat had brought the budget for the current fiscal year. The budget has not been implemented effectively. Now, with the formation of a new power equation and the finance minister coming from a different party, there are very slim chances of programs of the former finance minister being prioritized.

The new finance minister will likely try to change the team of the ministry and that will weaken the implementation of the current budget. There has been a trend of every finance minister transferring high-ranking officials of the ministry, including the finance secretary and the revenue secretary, immediately after taking charge of the ministry. Most of the finance ministers choose a finance secretary who works under their directive. In the last two years, the government has changed about half a dozen finance secretaries.

Outgoing finance minister Mahat appointed Krishna Hari Pushkar as the new finance secretary on September 15 last year. Mahat had changed three finance secretaries within 5 months after becoming the finance minister. Arjun Prasad Pokharel was the finance secretary before Pushkar. Toyam Raya held this position for about 4 months before Pokharel became Finance Secretary on May 3. Pushkar was the finance secretary before Raya. When the then finance minister Janardan Sharma brought the budget for the year 2079/80, Madhu Marasini, who was the finance secretary, was transferred after getting involved in a controversy of changing the tax rate in the budget due to the entry of unauthorized persons. Pushkar, who was appointed finance secretary on  August 11, 2022, was replaced by Raya on January 5, 2022.

The staff leadership of the Ministry of Finance, which has the responsibility of keeping the economy of the country in balance, has become like a 'musical chair'. Now the incoming finance minister can repeat the same practice. This may seriously affect the implementation of the current budget.

According to sources close to the Maoists, since the Prime Minister wants to keep the Ministry of Finance under his party, the ruling parties have agreed to appoint Barshman Pun taking charge as the finance minister. Pun is not an economists. The current budget may not be the priority of the new finance minister.

Dr. Mahat had announced a budget of Rs 1751 billion for the current year. So far, the government has spent Rs 752 billion. This year, the target is to spend Rs 1141 billion under the heading of current expenditure but the government has spent only 48.54 percent (554 billion) under this heading.

So far, the capital expenditure of the government is only 24.54 percent (Rs 73 billion) of the allocated budget of Rs 302 billion.

The data of the Ministry of Finance shows that 40.60 percent (Rs 124 billion) has been spent out of the allocated budget of Rs 307 billion under the heading of financial management. A little more than four months is left for the current fiscal year to end.

This year, the government had set a target of collecting revenue of Rs 1422 billion, but has collected Rs 605 billion percent (42.60 percent).

The government had scheduled to discuss the priorities and principles of the budget for the upcoming fiscal year 2081/82 in the parliament, but with the change in the power equation on Monday, the parliament was adjourned until March 7. It seems that the Parliament cannot hold a meeting until the balance of power is settled.

In order to make the implementation of the budget effective by improving the system of the budget, the Dahal-led government brought the law through an ordinance and started the practice of introducing the principles and priorities of the budget three months before the budget is presented in the parliament. However, due to the change in the power equation, it has not been able to discuss the issue in the parliament. There is a risk that the discussion on this matter will be affected in the House due to the prolonged tug-of-war.