Nepal hikes social security spending in budget

Reuters . Kathmandu | Published at 12:00am on May 31, 2019

Nepal’s finance minister on Wednesday hiked social security payments and civil servant salaries as he presented the annual budget for the Himalayan republic’s ruling communists.
The Nepal Communist Party was elected to power with a resounding majority in 2017 but prime minister KP Sharma Oli, a moderate, has been criticised for not fulfilling election promises to raise social security allowances.
Finance minister Yuba Raj Khatiwada, a former central bank governor, announced about 1.3 million people above 70 years of age will now get about $30 a month in benefits - a fifty per cent increase in a popular scheme introduced 25 years ago.
Widows, the disabled and orphans will have their monthly allowances doubled to $20, a step that will benefit another 900,000 people, he said.
Khatiwada said civil servants, teachers, army and police personnel will have their basic salaries increased by 18-20 per cent.
The changes begin on July 17, the start of the next fiscal year.
‘The salary hike will raise the morale of the civil servants and make them deliver effective public service,’ he said.
The leader of the opposition Nepali Congress party, Sher Bahadur Deuba, criticised the budget, telling reporters the government would struggle to implement the increases.
Khatiwada said about two-thirds of the total budget outlay of $13.71 billion would be raised from revenue collection and foreign grants. The rest will be met from internal as well as external borrowings from multilateral agencies.
Nepal has no commercial borrowings from international agencies, officials say.
Khatiwada announced a 50 per cent increase in the controversial ‘constituency development’ fund, which is meant to be spent by members of parliament on development activities in their areas. Critics say the funds could be used for political gains.
Khatiwada made no major tax changes but said agriculture- and export-oriented local industries would get incentives.
No details were given of that.
The budget set aside money for railway connectivity with neighbours China and India. Work on this will begin in two years, Khatiwada said.