Finance Minister Yubaraj Khatiwada announced a budget of Rs 1.47 trillion for the fiscal year 2020-21 in the joint session of the House of Representatives and National Assembly on May 28, with a major focus on reviving the economy following the effects of COVID 19 pandemic. The budget is 4% lower compared to the current fiscal year budget of Rs 1.53 trillion. The budget plans to bet on achieving higher economic growth target of 7% despite economic uncertainty driven by the pandemic.
Source of financing will be Rs 889.62 billion from revenue, Rs 60.52 billion from foreign grants, Rs 299.5 billion from external loans, and Rs 225 billion from internal loans. The government has allocated Rs 352.91 billion for capital expenditure, Rs 948.94 billion for recurrent expenditure, and Rs 172.79 billion for financing.
The government has raised the budget for the health sector to Rs 90.69 billion from Rs 68.78 billion for the current fiscal year, an increase by 32% out of which Rs 6 billion has been allocated for medicines and equipment as well as treatment to control the spread of Covid19. Khatiwada also said that the government has allocated a budget for building 200 hospitals with 5 to 15 beds at all local levels. The government is focusing on providing health insurance to all citizens in three years for which Rs 7.5 billion has been allocated and 40% of the population will be brought under insurance within next year. Budget has been also allocated for the construction of a 300-bed communicable diseases hospital in the Kathmandu valley. Similarly, 250-bed ICU hospitals and 50-bed communicable disease hospitals will be operated in all provincial capitals.
Besides the health budget, the government has announced continuity to the controversial Local Infrastructure Development Partnership Programme that allows federal lawmakers to spend budget on the projects they choose and design, but has reduced its size. A constituency used to get Rs 60 million, the amount now has been reduced to Rs 40 million for the next year.
The government also announced providing subsidised loans for entrepreneurs starting new businesses at 2% interest rate. The government has allocated Rs 500 million to cover the subsidised interest in this scheme.
In terms of infrastructure projects, Khatiwada announced heavy allocations for infrastructure development projects in the country. In total, the Ministry of Physical Infrastructure and Transport is receiving Rs 138 billion out of which key projects that would receive significant funds are Kathmandu-Tarai Fast Track (Rs 8.93 billion), international airport construction and preparation in Pokhara, Bhairahawa and Nijgadh, including the upgrading of Kathmandu Airport (Rs 19.42 billion), tunnel road projects (Rs 6.42 billion) and Melamchi Water Supply Project (Rs 5.4 billion).