Nepal government budget focuses on infrastructure building, relief

Sep 19, 2008, 15:08 GMT

Kathmandu - Nepal's Maoist-led government presented its first annual budget since abolishing the monarchy on Friday, focused mainly on infrastructure building and social development.

Finance Minister Babu Ram Bhattarai, who is the second highest- ranking Maoist leader, delivered a 236-billion-rupee ( about 3.2 billion dollars) budget, which was widely interpreted as being populist in nature.

'The government has given priority to education, employment generation, health and judicious distribution of economic gains to remove economic inequality,' Finance Minister Bhattarai said.

'Emphasis would be laid on infrastructure development such as road networks and hydro-electiricity projects that would directly benefit the people,' Bhattarai said.

Bhattarai also emphasized private-public partnerships as well as foreign investment in selected sectors for development of Nepalese industries.

'Five special economic zones would be set up and import and export duties waved for industries based in the area,' Bhattarai said.

The government hoped the budget financing would be achieved through internal loans, revenue collection and foreign aid and assistances.

Despite earlier Maoist intentions to cut the strength of Nepal's army which fought the Maoists' decade-long insurgency, the defence budget grew by 7.7 per cent to reach 12.2 billion rupees.

Economic analysts said the Maoist-led government's budget was a compromise to please both the lending agencies and the people who expect economic relief.

'The Maoists have been unable to include several measures in the budget such as debt relief to farmers and poorer sections of the society,' economist Ram Chandra Humagain said.

'The budget size is bigger than in the past years and despite Maoist slogans against foreign loans, it needs donor support to meet its goals and this has forced them to take the middle path.' Humagain added.

'The budget is expansionary, which could trigger higher inflation. The size of foreign aid projection is also high which ... could trigger problems for the government,' economist Bisomber Pyakurel said.