Kathmandu, June 21

It seems that the government will not be able to spend the budget even as per its revised estimates that were made during the mid-term review of the current fiscal year’s budget. The government had revised the estimates of expenditure during the half-yearly review of the fiscal budget 2017-18. However, only 80 per cent of the revised estimate has been spent till June 19, according to the Financial Comptroller General Office (FCGO).

The Ministry of Finance had revised the spending target to Rs 1,082.99 billion in this fiscal during the half-yearly review against the appropriated budget size of Rs 1,278.99 billion. There is less than a month’s time for the new fiscal year to begin, however, the government’s spending stood at Rs 870.24 billion till June 19.

The government has spent only around 83 per cent of the capital budget based on revised estimates despite bringing down the capital budget size by around Rs 100 billion during the half-yearly review. The government has spent Rs 194.66 billion till June 19, where as the government has to spend Rs 234.62 billion as capital expenditure in this fiscal. Through the budget the government had targeted to spend Rs 335.18 billion in the current fiscal 2017-18.

Budget execution in this fiscal has been comparatively better than previous fiscal. The government had spent only around 57.64 per cent of allocated budget in corresponding period of the previous fiscal. However, 68.04 per cent of the appropriated budget has been spent in this fiscal.

To achieve the capital expenditure target, the mid-term review of the budget had slashed the expenditure target by 30 per cent to Rs 234.62 billion compared to eight per cent of the recurrent expenditure. Recurrent expenditure was expected to hover around Rs 738 billion or 91.96 per cent of the allocation. While comparing the appropriated capital expenditure figures of this fiscal the government spent less than 50 per cent in the 11 months of this fiscal.

The government has spent around 77.94 per cent of the appropriated budget and around 85 per cent of revised estimate under the recurrent heading. A total of Rs 626.28 billion has been spent under recurrent budget, which is utilised to provide grants to local bodies and to pay the salaries of civil servants and security forces, among others.

Likewise, government spent 55.33 per cent of appropriated budget and around 71 per cent of revised estimates under financing heading, which is utilised for principal and interest repayment of foreign loans and investment in public enterprises. A total of Rs 77.62 billion was spent under financing in the first 11 months.

Meanwhile, it seems the government is unlikely to meet its revenue collection target in this fiscal, as only 87.33 per cent of the revenue has been collected in review period against annual target of Rs 730.05 billion in this fiscal.

Kathmandu, June 21

Dairy entrepreneurs have claimed that sales of pasteurised milk have come down since the past week following the recent ‘soda scam’.

An inspection carried out in the dairy firms by the Department of Food Technology and Quality Control (DoFTQC) last week had found that different brands of packaged milk being sold in the domestic market were adulterated with various chemicals including washing soda.

Following this, consumers have become reluctant in consuming packaged milk, dairy entrepreneurs said.

“Consumption of packaged milk has come down by more than 30 per cent since last week,” informed Praladh Dahal, general secretary of Nepal Dairy Association (NDA).

As per NDA statistics, almost five million litres of milk is consumed across the country every day.

However, Dahal cited that traces of soda and other chemicals found in pasteurised milk is not the fault of dairy firms as such chemicals are mixed at the milk collection centres.

“As the temperature has been soaring in recent days, both farmers and milk collection centres use such chemical ingredients to prevent milk from curdling,” informed Dahal.

Dahal urged the government to adopt measures to prevent the use of washing soda in packaged milk by farmers and milk collection centres.

Earlier last week, DoFTQC had collected 42 samples of packaged milk from 25 dairy companies. When the samples were tested, a majority of these milk samples were found to have used chemical ingredients including sodium hydroxide (caustic soda), bicarbonate and sodium carbonate.

Meanwhile, the government is preparing to develop a guideline to check the quality of milk in the domestic market following perennial complaints that packaged milk supplied in the market does not meet international quality standards.

A separate committee at the Ministry of Livestock Development (MoLD) is preparing the draft of a guideline on the quality of milk.

Currently, the government has been monitoring the quality of foods, including milk, based on the Food Act, 2028. However, the quality guidelines of foods incorporated in the Food Act, 2028, have become obsolete in the current context.

Kathmandu, June 21

Altogether 308 transport bodies (associations and committees) have registered themselves at the Department of Transport Management (DoTM) after completing their company registration process in the last two months.

Following the decision of the government to scrap all transport bodies on April 11 intending to bring their businesses under the company registration process, transporters are gradually registering their committees and associations at the Office of Company Registrar (OCR).

As per the earlier decision of the government, DoTM will not renew registration of existing transport bodies under the current format.

Despite this plan of the government, a majority of transport bodies including some renowned transport associations like Narayani Transporters’ Association, Araniko Transport Association and Prithivi Highway Bus Entrepreneurs’ Association, among others are yet to start company registration process.

This shows that transport entrepreneurs are still hopeful that the government might reverse its earlier decision and allow transport bodies
to operate by registering themselves at the district administration offices.

In fact, the recent moves made by the Ministry of Physical Infrastructure and Transport (MoPIT), including the decision to transfer the DoTM leadership that has slowed down the pace of government’s campaign to end transportation syndicate seems to have boosted the morale of transport entrepreneurs.

Moreover, transport entrepreneurs are learned to have been pressurising MoPIT and officials of the Ministry of Home Affairs to support the syndicate system.

Tulsiram Aryal, spokesperson for DoTM, said that though company registration at OCR is mandatory for transport bodies to renew their registration, a number of transport association are yet to register themselves at OCR.

However, Aryal clarified that DoTM will not renew the registration of any transport association/committee unless they complete the set legal provisions. Moreover, he also informed that DoTM will not issue vehicle route permit to vehicles of those transport bodies that are not registered at OCR.

Making transport bodies operate as a company will not only end the syndicate practices in the transportation industry, but will directly increase revenue worth billions of rupees for the government.

There are hundreds of transport bodies registered as non-profit associations at the district administration offices. However, though these transport bodies are functioning as commercial organisations and making huge profits, they are beyond the income tax net of the government.

Bringing these transport bodies under OCR will bring the public transportation sector, which has transactions worth billions of rupees annually, under the income tax net of the government.

Kathmandu, June 21

Due to unhealthy competition among banks to woo deposits by offering high interest rates on deposits after the removal of the ‘agreed’ interest rate ceiling on June 10, the Nepal Bankers’ Association — the umbrella body of class ‘A’ financial institutions — has again fixed the ceiling on interest rate in deposit schemes.

According to Gyanendra Prasad Dhungana, president of NBA, commercial banks agreed to keep the interest rate on fixed deposits below 11 per cent and that on saving deposits below seven per cent. Interest rates on deposits had sky-rocketed after NBA removed the ceiling a fortnight ago. Bankers agreed to keep the interest rates at the aforementioned threshold after the Ministry of Finance asked government-owned institutions, such as Citizen Investment Trust, Employees Provident Fund and Insurance Board, to look into the sustainability of interest rates. The MoF has expressed anxiety over the unsustainably growing bank interest rates irrespective of the inflation. Average inflation in the first 10 months of this fiscal was 4.1 per cent.

Around this time in the previous fiscal years, deposit rates used to take a dip due to higher development expenses of the government. However, government expenses have yet to gather pace this fiscal as only around 50 per cent of the capital budget has been spent in the 11 months of this fiscal, according to the Financial Comptroller General’s Office.

As per bankers, credit demand is high this year, but the sources for deposit collection are limited.

Ashoke Shumsher Rana, CEO of Himalayan Bank, said banks were under pressure to lift the agreed ‘ceiling on interest rate’ as institutional depositors started bargaining with the banks where they deposit their funds.

Due to under-utilisation of the capital budget, weak remittance growth and sluggish exports, deposit growth has been sluggish throughout the year. Against this backdrop, if banks start competing on deposit rates, that will invite risk in the financial market.

Nepal Rastra Bank has also asked NBA to maintain ‘discipline’ while competing on deposit rates, citing risky behaviour of some financial institutions, according to bankers.

“Interest rate on lending is also expected to stabilise as banks won’t breach the interest rate ceiling they have agreed upon,” stated Rana.

The lending rate has remained high throughout the fiscal and there is no sign of it coming down. Bhuvan Kumar Dahal, CEO of Sanima Bank, said loan demand was still high and banks were disbursing even the already committed loans gradually in various tranches based on the increase in deposits.

According to NBA, till the 11th month of this fiscal, the total deposits collected by the banks stood at Rs 256 billion, whereas banks had floated loans worth Rs 342 billion.

Banks can issue loans of up to 80 per cent of the sum of deposit and core capital. Deposit of the banks stood at Rs 2,256 billion, while total loan portfolio of the banks stood at Rs 2,063 billion. The growth of deposits stood at 11.3 per cent, whereas loans grew at 16.5 per cent in the review period.

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