KATHMANDU, Sept 18: Government revenue rose by Rs 25.67 billion in the first two months of fiscal year 2026/27, as authorities pursued policies to broaden the tax base, encourage taxpayers and improve revenue administration.
According to the Finance Ministry, revenue collection reached Rs 183.20 billion by the end of Bhadra (mid-September), up from Rs 157.53 billion in the same period last year.
The government collected 11.59 per cent of its annual revenue target of Rs 1.58 trillion during the two months. In the corresponding period last year, it had collected 10.64 per cent of its target, indicating some improvement in the pace of collection.
The increase is an encouraging sign as the government seeks to expand the tax base and improve administration. However, how it spends that income and the resulting effects on the economy also matter.
Diversifying Government Revenue
Including revenue, grants and other receipts, total government receipts reached Rs 190.11 billion by the end of Bhadra, compared with Rs 160 billion a year earlier, an increase of about 18.8 per cent.
Despite the improvement in revenue, development spending remained weak. While revenue collection rose by more than Rs 25 billion, capital expenditure stood at just Rs 7.66 billion.
Total government expenditure exceeded receipts, reaching Rs 199.84 billion during the period, up from Rs 180.17 billion a year earlier.
The gap between receipts and expenditure presents a challenge for government cash management and the balance of public finances, despite stronger revenue collection.
Recurrent expenditure accounted for the largest share of spending. It reached Rs 122.04 billion by the end of Bhadra, compared with Rs 114.19 billion in the same period last year, an increase of Rs 7.85 billion.
Capital expenditure, which directly supports infrastructure and development, increased from Rs 6.35 billion to Rs 7.66 billion. Although this represented growth of Rs 1.31 billion, or about 20.6 per cent, it amounted to just 1.78 per cent of the annual capital budget.
The low level of capital spending raises questions about the government’s ability to implement its budget. Slow spending during the first two months is not new, however. Much of Nepal’s budget execution tends to be concentrated towards the end of the fiscal year.
Delays in implementing development projects can affect the quality of public spending, slow infrastructure construction and limit the demand that government investment generates in the economy.
Expenditure under the financing category reached Rs 70 billion, compared with Rs 59.63 billion in the same period last year. The increase shows that government liabilities and debt repayments continue to account for a substantial share of public expenditure.
Overall, the figures show improving revenue collection at the start of the fiscal year, but development spending has not kept pace. With much of the money collected going towards recurrent expenditure and financing obligations, effectively mobilising resources for capital formation remains a challenge.
In the coming months, the government needs to sustain revenue growth while speeding up capital budget implementation. Removing obstacles in project selection, contract management, construction material supplies and payment procedures will be necessary to turn budget allocations into actual development spending.
