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Managing Government Finances: Striking a Balance

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Governments can only spend what they collect from taxes and what they can borrow, and both come at a cost. In Parliament, during 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 inherits a large public debt. This debt restricts the ability to improve infrastructure and public services that have been neglected for years.

Professor Prasad highlighted that the task becomes even more difficult if the economy is recovering from a significant setback like COVID-19, necessitating fiscal support to sustain that fragile recovery. He stressed the importance of making the best use of taxpayer resources to yield the highest return. This often requires making tough decisions and policy trade-offs, prioritizing economic and fiscal responsibility over short-term political gains.

He added that given the critical role of the government in providing essential public services, it is crucial that the government is adequately funded. In recent years, insufficient funding had prevented the government from fixing hospitals, improving roads, solving water issues, cleaning drainage systems, maintaining public assets, and adequately compensating civil servants.

Professor Prasad concluded by stating that in their two budgets, they ensured the government was well funded, not only to fix public infrastructure and services but also to manage fiscal deficits and reduce public debt.

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