Governments can only spend what they collect from taxes and what they can borrow, both of which come at a cost.
Deputy Prime Minister and Minister for Finance, Professor Biman Prasad, emphasized this point in Parliament during his right of reply. He noted that crafting a national budget is challenging, particularly when the Government has inherited a significant public debt. This debt limits the ability to improve infrastructure and public services that have been neglected for years.
“It becomes even more difficult if the economy is recovering from a major setback like COVID-19, which requires fiscal support to maintain that fragile recovery,” he stated.
Prof Prasad stressed the importance of making the best use of taxpayer resources to achieve the highest return. “This means making tough decisions and policy trade-offs, often choosing what is economically correct and fiscally responsible over short-term political survival,” he added.
He highlighted the necessity for adequate government funding to provide essential public services. “Otherwise, as we saw in recent years, the Government lacked sufficient funds to repair hospitals, improve roads, address water problems, clean drainage systems, maintain public assets, and fairly compensate civil servants,” he explained.
He concluded by noting that in the past two budgets, the Government has ensured proper funding not only to fix public infrastructure and services but also to manage fiscal deficits and reduce public debt.