Low revenue collection takes huge toll on mega development projects

Published On: March 28, 2023 08:05 AM NPT By: Republica  | @RepublicaNepal

Govt heavily slashes budget allocated for development projects, makes fund transfer to meet recurrent liabilities 

KATHMANDU, March 28: Amid pressure of scanty financial resources as a result of low revenue collection, the government has cut down heavily the budget allocated for development projects, while transferring allocated budget to running projects and to meet recurrent liabilities.  

According to an official at the Ministry of Finance (MoF), the government has largely reduced the funds allocated for its ambitious programs announced in the budget for the current fiscal year. “As the revenue collection has fallen short of the targeted amount by around 16 percent than the amount of the last year, the funds announced mainly for the programs based on the grants of the federal government have been reduced,” the MoF source said.

As an instance, the government has cut down the budget on ‘Prime Minister Nepali Product and Consumption Promotion Program’ from Rs 3.45 billion to mere Rs 500 million for the current fiscal year.

The government has also reduced the budget ceiling of a number of ministries.  The budget ceiling for the Ministry of Industry, Commerce and Supplies has been reduced by 22 percent to Rs 8.13 billion for the fiscal year 2023/24.

Likewise, the budget ceiling for the Ministry of Physical Infrastructure and Transport has also been lowered by 21.8 percent to Rs 126.29 billion for the next fiscal year. This is set to hit hard the progress of the development projects, according to analysts.

With almost nine months of the current fiscal year completed, the government has been able to collect only 43 percent of the revenue collection targeted for the current fiscal year. With just three months left now, it will be next to impossible for the government to collect the remaining 57 percent of the targeted revenue of Rs 1.403 trillion this fiscal year.  

Meanwhile, the government has moved to cash transfer by a notable amount from the planned mega projects to those under construction. Out of the funds collected for Budhi Gandaki Hydropower Project, Rs 400 million and Rs 1 billion have been diverted to flood control and Sunkoshi-Marin Diversion Multipurpose Project, respectively. 

Similarly, Rs 150 million has been reallocated to the Dhulikhel-Suryabinayak-Koteshwor road segment from upgradation of highways connecting the capital to various provinces.    The government carried out a budget transfer worth Rs 22.75 billion during the first seven months of the current fiscal year. In just one month between mid-February and mid-March, the fund transfer of Rs 9.78 billion was carried out to meet recurrent liabilities of the government, according to the MoF. 

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