KATHMANDU, MAY 17, 2012
Finance Ministry will introduce a special provision regarding loans and subsidies to public enterprises (PE) as it has faced a lot of problem due to PEs seeking loans and grants, though there has not been any amount earmarked for them in the fiscal policy.
The ministry has been facing problems to manage fund for public enterprises since the government does not allocate a budget for those entities, said spokesperson at the finance ministry Rajan Khanal. “Also the release of huge amounts as loans or grants has been hitting development projects as it means a reduction of the budget for development work.”
The government has to spend at least Rs 360 million every year on a few public entities just to distribute salaries to their employees and in other administrative costs, according to the Finance Ministry. Besides, loans to Nepal Oil Corporation (NOC) and other public enterprises which have been incurring losses has emerged as a key issue.
The government provided a loan of Rs 10 billion to NOC alone, he said, adding that
one third, out of the total amount, was directly released by the government and the
rest was provided after the Finance Ministry provided a guarantee to the lenders.
Similarly, the government has to bear Rs 20 million in administrative costs of Janakpur Cigarette Factory and Rs 4 million for Nepal Drugs every month, according to Finance Ministry.
Nepal Orind Magnesite and Nepal Metal Company are also completely dependent on the government for their administrative expenses.
Most of the loss-bearing public entities have been regularly approaching the Finance Ministry for grants or loans. “So, the government should allocate some fund in the budget.”
The ministry is planning to introduce some clear conditions which will be applied to
all public entities when they
approach the ministry for a loan. “Not all PEs will be eligible to ask for loans from the Finance Ministry,” said Khanal, adding that there has to be a convincing reason to avail a loan or grant.
Source: THT
Finance Ministry will introduce a special provision regarding loans and subsidies to public enterprises (PE) as it has faced a lot of problem due to PEs seeking loans and grants, though there has not been any amount earmarked for them in the fiscal policy.
The ministry has been facing problems to manage fund for public enterprises since the government does not allocate a budget for those entities, said spokesperson at the finance ministry Rajan Khanal. “Also the release of huge amounts as loans or grants has been hitting development projects as it means a reduction of the budget for development work.”
The government has to spend at least Rs 360 million every year on a few public entities just to distribute salaries to their employees and in other administrative costs, according to the Finance Ministry. Besides, loans to Nepal Oil Corporation (NOC) and other public enterprises which have been incurring losses has emerged as a key issue.
The government provided a loan of Rs 10 billion to NOC alone, he said, adding that
one third, out of the total amount, was directly released by the government and the
rest was provided after the Finance Ministry provided a guarantee to the lenders.
Similarly, the government has to bear Rs 20 million in administrative costs of Janakpur Cigarette Factory and Rs 4 million for Nepal Drugs every month, according to Finance Ministry.
Nepal Orind Magnesite and Nepal Metal Company are also completely dependent on the government for their administrative expenses.
Most of the loss-bearing public entities have been regularly approaching the Finance Ministry for grants or loans. “So, the government should allocate some fund in the budget.”
The ministry is planning to introduce some clear conditions which will be applied to
all public entities when they
approach the ministry for a loan. “Not all PEs will be eligible to ask for loans from the Finance Ministry,” said Khanal, adding that there has to be a convincing reason to avail a loan or grant.
Source: THT
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