Fiscal Space for Social Security in

Nepal Room to widen?

Presented by Kewal Bhandari, Joint Finance Comptroller General, Financial
Comptroller General Office, Ministry of Finance, Nepal

DISCLAIMER: This presentation does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held
liable for its contents.

SS Investment
4.4% of GDP, 12.2% of budget FY 2015/16
Mostly in the form of cash transfer, some in the
form of social benefits
Increasing investment in
Cash transfer
Public pensions
Health care and free medicines

Context and Vulnabarities

Characteristics of SS program
Scattered with multiple implementing entities
Mostly non contributory
High dependency on tax finance - small external
assistance
Duplication and chances of misappropriation
Low coverage compared to finance
universal vs targetting

Inclusion and exclusion error in cash transfer

Lack of proper identification

Existing SS Programs
5 Social Insurance
33 Social Assistance

17 Cash Transfer
9 Kind Transfer
6 Public Works
1 Care Services

5+ Labour Market Initiatives

5+ Others

Social Security Fund: a new initiative

Integrated and Unified SS Bill in Parliament
Labor law reform
Formal, Informal, unemployed, self employed
Labor participation for increased productivity

New institution, new initiative

Expanding SS coverage with contribution
More SS provisions in New constitution

Protection of SS financing
Initiation
Social Security Tax through payroll contribution
Contributory Health Security program
Contributory Public Pension Bill drafted
Planning
Increasing SST
Special tax, new tax and other forms of collection
Taxation on luxury goods and services (may
explore)

Widening fiscal space

Low fiscal deficit Debt to GDP ratio less than
30 percent
Potential for larger fiscal space

Lower tax revenues as percentage of GDP

Greater potential for raising additional funds

Revenue Reform - target met even in the hard

time
Indicates enough room for more revenue

Tapping the untapped

Innovative financing: financial franscation fax

Sustainability for SS financing

Stimulate economic growth

Enhance productive employment
Create enough fiscal space
Formalizing the informality
Affordability vs schemes
Prioritization/reprioritization of public programs
Allocative efficiency
Resource availability vs resource management

Sustainability for SS financing

Spending better
Cost control mechanisms including internal
control
Administrative capacity
Sound implementation: use of SSID
Governance reform, including M&E
Start with limited coverage, small benefit
level and expand over time.

Thank you !