New Nepal PM faces acid test over budget

Still floundering to form his cabinet almost a week after he became Nepal`s new prime minister with the support of the Maoist party, communist chief Jhala Nath Khanal now faces a critical test - the budget.

Last Updated: Feb 09, 2011, 12:58 PM IST

Kathmandu: Still floundering to form his cabinet almost a week after he became Nepal`s new prime minister with the support of the Maoist party, communist chief Jhala Nath Khanal now faces a critical test - the budget.

The 61-year-old will need to have the current budget ratified by parliament by Feb 15 - Tuesday - or else face the collection of revenue and state expenditure coming to a grinding halt.

A stormy budget is the legacy Khanal has inherited from the previous government of Madhav Kumar Nepal that failed to pass the budget (for the current financial year) in parliament due to opposition by the Maoists.

Consequently, facing an economic crisis, the then finance minister Surendra Pandey had to bring in the budget through ordinance after an unprecedented scene of chaos and violence in the house last November when he was even manhandled by Maoist MPs.

The Maoist obstruction caused the government to bring in the budget four months late, hampering development work and other activities.

Now, as per law, the ordinance-enforced budget has to be endorsed by parliament by Feb 15.

It will be a tough, if not impossible, task as parliament has to endorse it by two-thirds majority.

Khanal enjoys majority support with the support of the Maoists. However, he will need to win over the Nepali Congress, the second-largest party in parliament and his former ally.

To win the prime ministerial election this month, Khanal abandoned the Nepali Congress and formed a new alliance with the Maoists, causing the former to sit in opposition now.

Besides the spurned ally, the bloc of regional parties from the Terai plains, who too were bypassed by Khanal`s party during the election, is also likely to drive a hard bargain to support the budget.

To add to the complications, Khanal, who has still not been able to name a fledgling cabinet due to a power-sharing row with the Maoists, is planning to introduce a new budget instead of having the old one endorsed.

"It is an immature move," said Bishwambher Pyakuryal, a leading economist. "Since the Nepali financial year starts from mid-July, only five months are left for the current fiscal to end. The government should have continued with the old one instead of trying to bring in a new budget."

Pyakuryal also foresees difficulties with passing a new budget in parliament given the lack of time and the new prime minister`s distance with the Nepali Congress and the Terai parties.

Even if the budget is pushed through, he warns that the government will be unable to spend the allocated budget.

"The procurement acts in Nepal are so complicated that the allocated budget is yet to reach the local level," he says. "Nepal has not been able to spend the money earmarked for the information and communication technology sector even three years after the allocation was made."

Maoist opposition forced the earlier government to bring in two budgets this financial year - a mini one in July 2010 and the full budget in November.

Now the Maoists, who blocked the budget to get to power, are likely to get a dose of their own medicine as parliament once again gears up for a fresh battle over budget.

IANS