Expenditure revised at Rs 1.692 trillion, revenue collection target reduced to 1.286 trillion
KATHMANDU, Feb 7: The government has downsized the budget for the current fiscal year to Rs 1.692 trillion, which is 90.99 percent of the initial estimate. The government slashed the budget citing the slow capital expenditure, inadequate revenue collection and low realization of foreign loans.
Unveiling the mid-term review of the budget for the FY 2024/25 on Thursday, the government reduced the earmarked expenditure by Rs 168 billion than the amount allocated through the annual budget. Earlier, the government had announced a total budget of Rs 1.860 trillion for the current fiscal year.
It has become routine work for each government to announce an ambitious and inflated budget and then downsize it later.
Last year too, the government downsized the budget for FY 2023/24 by 12.62 percent to Rs 1.530 trillion during the middle of the fiscal year.
Speaking at a press meet organized by the Ministry of Finance (MoF) on Thursday, Finance Minister Bishnu Prasad Paudel termed the revenue collection target of the current budget ‘over ambitious.’
The then Finance Minister Barsha Man Pun of the previous government led by Pushpa Kamal Dahal had announced the budget for FY 2024/25 on May 28, 2024.
“While the government is facing a challenge to utilize adequate amounts of capital expenditure, the portion of mandatory liabilities, payments for multi-year projects and abrupt surge in liabilities triggered by natural disasters have exerted extra pressure on budgetary management,” said Paudel.
While reviewing the total budget size, the government has reduced the recurrent expenditure by 9.76 percent to Rs 1.029 trillion. Similarly, the capital expenditure target has also been reduced to Rs 299.50 billion from Rs 352.35 billion. In almost seven months of the current FY, the government spent only 18.29 percent (Rs 64.46 billion) of the amount allocated for development projects.
According to the MoF, the government has been facing challenges to meet its revenue collection target mainly due to the ongoing economic slowdown. Through the mid-term review, the government has reduced the revenue collection target by Rs 133 billion, down to Rs 1.286 trillion from Rs 1.419 trillion. In addition, the external borrowing target has also been reduced by 16.92 percent to Rs 180.83 billion.
Although the revenue collection in the first six months of the current FY increased 12.7 percent compared to the same period of the last FY, the government has failed to meet the target. It is due to the exaggerated target maintained this year, reads the budget review.
The annual budget has targeted to achieve economic growth of six percent for the current FY. However, the government is likely to miss the growth target as well. According to the National Statistics Office, the country’s economic growth rate stood at only 3.4 percent in the first quarter this year.