Newly appointed Finance Minister Dr. Ram Sharan Mahat has blamed the erstwhile royal government of pushing the country’s economy on the verge of collapse and has warned of serious fiscal crisis in the country.

Presenting the “White Paper” on the state of the country’s economy at the meeting of the reinstated House of Representatives on Monday, Minister Mahat warned that the government was likely to come across serious fiscal deficit in the days ahead. He admitted that the government was not in a position to meet its recurrent expenditure through existing sources of revenue.

Dr. Mahat said this year the economy was likely to grow at 1.8 percent only—less than the current population growth of 2.4 percent. “Instead of improving country’s economy, the situation is such that people might be poorer,” he said.

According to the 17-page long “White Paper,” inflation has gone up by 8 percent in the first eight months of the current fiscal year compared to that of 4 percent last year. The previous government had proposed to raise revenue worth Rs 81.81 billion in this fiscal year, but the Paper said there is likely to be a revenue shortfall of Rs eight billion.

Dr. Mahat said successive governments since October 4, 2002—when King Gyanendra dismissed a multi-party government—had spent scarce resources recklessly and security expenses had spiraled. Four years ago, the strength of security forces stood at over 121,000 — which rose to over 165,000 now. Similarly, security related expenses rose to nearly Rs 19 billion—up from nearly Rs 12 million four years ago. This year, the government has already spent nearly Rs 16.5 billion in security related expenses by mid-April this year.

The minister further said budget allocated for the royal palace had gone up by over six times over the last four years. In the fiscal year 2058/59 B. S., the government had allocated Rs 126.3 million for the royal palace. But, this year the government has already allocated Rs 751.2 million for the royal palace, he said.

Minister Dr. Mahat said the royal government created a liability of Rs 3.30 billion by purchasing plane and helicopters and an annual expenditure of Rs 1.21 billion by recruiting additional 10,000 soldiers this year. Rs 360 million was spent in high-level visits while Rs 280 million was spent in organizing controversial municipal level elections early this year.

The Seven Party Alliance government has already invalidated the municipal polls.

The Finance Minister said the government had adopted the policy of curtailing unnecessary expenditure in view of widening fiscal deficit. He said the government had suspended the purchase of new planes and no new positions will be created. He further announced that the government had imposed ban on ‘unnecessary’ foreign junket involving officials. He didn’t specify.

Minister Mahat said the government would soon announce a relief package so as to provide assistance to the family of martyrs and those who were injured during the pro-democracy movement, to rehabilitate people displaced due to the conflict and for the reconstruction of the infrastructure.

The Finance Minister called upon Nepal’s donors and multilateral agencies to release the assistance which they had suspended since the royal takeover last year, provide direct budgetary support to address the ‘cash crunch’ of the government and offer ‘liberal support” to help the government in its economic reconstruction programme.

Dr. Mahat also urged friendly countries to cancel their old travel advisories and encourage tourists to pay visit to Nepal as a “safe destination.”