KATHMANDU, Feb 9: The government has reduced the budget of the current fiscal year to Rs 1.34 trillion from Rs 1.47 trillion, citing the spread of the COVID-19 that resulted in slow expenditure and revenue mobilization during the first half of the fiscal year.
Revising its annual expenditure target of Rs 1.47 trillion for 2020/21, the government has now reduced it to 91.19 percent of the earmarked amount. Announcing a mid-term review of the annual budget on Tuesday, the government restructured the financial resource allocation for the ongoing fiscal year.
According to the Ministry of Finance, the government was forced to revise the budget due to adverse effects on both revenue collection and public expenditure. Extension of the deadline of the projects, delayed payments, failure to resolve the issue related to the public procurement system and contractors, delayed approval of the guidelines and laws related to implementation of projects planned in the annual budget and lack of coordination among the three tiers of government have been blamed for the slow expenses.
The government has downsized the capital expenditure to Rs 283.04 billion against the allocated amount of Rs 352.91 billion. The capital expense target is now 80.2 percent of the total allocated amount for construction of infrastructure.
Similarly, the government has revised the recurrent expenses to 96.4 percent of the targeted amount of Rs 948.94 billion.
The government has also reduced the target of revenue collection to 959.68 billion for this year, which accounts for 94.85 percent of the Rs 1.01 trillion targets set at the beginning of the fiscal year. According to the MoF, the revenue collection during mid-July last year and mid-January this year was Rs 450 billion. The ministry expects to collect Rs 509.61 billion in the second half of the current fiscal year.
The government has set the revenue target for the rest of the period expecting that there will be an improvement in the economic activities along with a decline in cases of coronavirus infections.
The government has also stepped back from its economic growth target of 7 percent set for this fiscal year. Endorsing a populist budget announcement of May 28, the government had set an ambitious growth target of 7 percent ignoring the possible adverse impacts of lockdown and the expanding threat of the coronavirus.