Governments can only spend what they collect from taxes and what they borrow, both of which come with significant costs.
In his response in Parliament, Deputy Prime Minister and Minister for Finance, Professor Biman Prasad emphasized the complexities of formulating a national budget, particularly when the government inherits a large public debt. This debt restricts its ability to repair neglected infrastructure and public services.
Prasad pointed out that budget formulation becomes even more challenging if the economy is recovering from a significant setback such as COVID-19, which requires fiscal support to protect the fragile recovery.
He stressed the importance of governments making the best use of taxpayer resources to achieve the highest returns. This involves making tough decisions, policy trade-offs, and often choosing what is economically sound and fiscally responsible rather than seeking short-term political gains.
Given the critical role of the government in providing essential public services, Prasad highlighted the necessity of proper funding.
“A lack of funds has previously resulted in insufficient resources to fix hospitals, improve roads, address water issues, clean drainage systems, maintain public assets, and adequately compensate civil servants,” he said.
“Our two budgets have ensured that the government is well-funded, not only to repair public infrastructure and services but also to control fiscal deficits and direct public debt downwards.”