programs should be directed to facing those challenges. At the same time, it hasbecome indispensable for the state to incorporate all the groups, genders, races,communities and geographical areas so far ostracized by market economy andsuffering from discrimination as well as non-inclusion. Political stability is its sinequo non. This will also support the strengthening and consolidation of the federaldemocratic republic.
Review of Economic Status and Budget Implementation of the Current Fiscal yearRight Honorable Speaker,
According to revised estimate, GDP growth rate is likely to register 3.8 % at basic priceand 4.7% at produces’ price in the current fiscal year. The GDP growth has declinedowing to factors such as energy crisis, unfavorable weather, decline in capitalexpenditure, disturbed industrial sector, absence of elected local representatives andglobal economic crisis.7.
Annual average inflation is expected to surge by 13% due to the high food prices drivenby world food crises, devaluation of Nepali currency, cartelling and malpractices in thedomestic market, weak public delivery system, closure, strike, transport halt andobstruction created in supply system by different agitating groups.8.
The Balance of Payment situation and foreign currency reserve is in satisfactorysituation because of remittances inflow and increase in the receipt of export and tourismearnings. Export and import are expected to go up by 28.6% and 12% respectively inthe FY 2008/09 as compared to same period previous year. Trade deficit is expected towiden by 28.2 % and remain at Rs 208 billion 510 million. Of the total trade deficit,India alone accounts for 57.3 %. As of mid-May 2009, the gross foreign exchangereserves stood at Rs. 282 billion 330 million which is adequate to finance merchandiseand service imports of 10 months. Balance of payment is expected to register a surplusof Rs. 30 billion at the end of the current fiscal year.9.
According to the revised estimate, total government expenditure will remain at Rs. 213billion 578.3 million in the FY 2008/09. Of this, the share of recurrent expenditure isRs 122 billion 79.5 million (57.16% of total expenditure), capital expenditure Rs.73billion 309.5 million (34.32% of total expenditure) and repayment of principles andinterest Rs 18 billion 189.3 million (8.52% of total expenditure).10.
A special effort has been made toward minimizing future liabilities and allocating moreresources for development activities in future by utilizing the probable savings in thecurrent fiscal year. In this regard, a budget of Rs. 400 million was set aside for debtcancellation, however, total liability for this increased to Rs. 5 billion 970 million; buthas been paid up all in the current fiscal year itself instead of transferring liability tofuture. A sum of Rs. 4 billion 550 million has been allocated as payment of 7 years