Nepal's new government slashed the royal palace subsidy by almost 71 per cent in its annual budget on Wednesday which outlines almost $2 billion in spending, the finance minister said.
KATHMANDU: Nepal's new government slashed the royal palace subsidy by almost 71 per cent in its annual budget on Wednesday which outlines almost $2 billion in spending, the finance minister said.
For the fiscal year started July 1, 2005, the royal government had allocated $10.6 million for King Gyanendra's household.
But this would be cut to $3 million in the current fiscal year under the first budget to be presented to parliament in four years, Finance Minister Ram Sharan Mahat said in a speech to legislators.
"This allocation is lower by 70.7 percent of the total expenditure," Mahat said.
The new government came into power after Gyanendra was forced to end 14 months of direct rule in April following mass protests by sidelined political parties in alliance with Maoist rebels.
Gyanendra, who had suspended parliament in 2002 and sacked a federal cabinet in Febuary 2005, has since been stripped of his political powers and control of the 90,000-strong army.
More than half, or $1.1 billion, of this year's budget of $1.9 billion will be supplied by government revenue streams and $556 million will come from foreign loans and grants, Mahat said.
Military spending "cannot be decreased" Mahat said. Last year the military budget was around $257 million, according to government figures.
"The defense expenditure cannot be decreased unless the number of Nepal Army cadres, which has been increasing for the last four years, is reduced to a given level," said Mahat.
He added that a budget shortfall of $307 million will have to be financed.
The new government, which has agreed to a key rebel demand for the holding of elections to a body that will rewrite Nepal's constitution, slated 17.1 million dollars for that purpose, Mahat said.
"The present government... has accorded foremost priority to hold the election of the constituent assembly in a free, fair and fearless environment," said Mahat.
Mahat said a ceasefire between the rebels and government since May in a decade-long insurgency that has ravaged the economy and claimed more than 12,500 lives bodes well for the business outlook.
"The closed factories and businesses will reopen in the peaceful environment. Private sector investment will significantly increase in the country," Mahat said.
He predicted economic growth of five percent in the next year and inflation averaging six percent. In the last four years, economic growth has been around two percent and inflation has spiked to double digits because of frequent strikes and rebel blockades of highways.
The new government intends to ramp up investment in rural areas, the heartland of the rebel Maoists where around 75 percent of Nepal's 27 million people live.
"The foundation for inclusive economy can be laid only be increasing public investment in underdeveloped areas and for backward groups and communities," Mahat said during two-hour address.
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