Governments can only spend what they collect from taxes and what they can borrow, and both come at a cost.
Addressing Parliament in his right of reply, Deputy Prime Minister and Minister for Finance, Professor Biman Prasad, emphasized that formulating a national budget is challenging, especially when the government has inherited a substantial public debt. This debt limits the ability to repair infrastructure and improve public services that have been neglected for years.
“This challenge is exacerbated when inheriting an economy recovering from a significant setback like COVID-19, which requires fiscal support to sustain the fragile recovery,” he stated.
He stressed the importance of using taxpayer resources effectively to yield the highest return.
“This necessitates making difficult decisions and policy trade-offs, often choosing what is economically sound and fiscally responsible over short-term political gains.”
Professor Prasad highlighted the crucial role of government in providing essential public services and the need for adequate funding to fulfill this role.
“Otherwise, as witnessed over the past years, insufficient funding resulted in the inability to fix hospitals, improve roads, address water issues, clean drainage systems, maintain public assets, and properly compensate civil servants,” he noted.
“In our two budgets, we have ensured that the government is well-funded, not only to repair public infrastructure and services but also to manage fiscal deficits and reduce public debt.”