Unveiling the mid-term review of the budget for Fiscal Year 2015/16, government has pledged to take necessary initiatives for achieving the revised economic growth of 2 percent.
The government had set growth target of 6 percent in the budget for 2015/16. However, it had revised the target to 2 percent in the white paper issued in November last year.
Low yield of summer crops, including paddy, due to inadequate rainfall coupled with disruption in supply of chemical fertilizers as well as contraction in non-agriculture sector due to supply problem were the reasons behind slow economic growth, according to the report.
Minister for Finance Bishnu Paudel endorsed the mid-term review on Thursday.
Talking to Republica, Govind Nepal, chief economic advisor to the finance minster, said he was hopeful of economic activities returning to normalcy in the near future. "The distribution of the first installment of the Rs 200,000 housing grant for quake-hit families will create demand in the market," he said, adding, "Business will resume operation and more investments will come in infrastructure projects."
Total expenditure over the first half stood at Rs 179 billion which is only 21.94 percent of the total budget. Capital expenditure during the period stood at 7.18 percentage of the total allocation of Rs 208 billion.
To meet budget shortfall for key projects and compensate for contraction in revenue growth, the government has announced to borrow Rs 88 billion from the internal market as estimated in the budget speech. Nepal Rastra Bank (NRB) has already started the process to raise the amount through different financial instruments.
The government had borrowed only Rs 42 billion of the estimated Rs 52 billion from the internal market in 2014/15.
REVENUE TARGET MISSED
Meanwhile, the government could mobilize only Rs 164 billion in revenue in the first six months of 2015/16. The amount is 75.87 percent of the revenue target set by the government in the budget for 2015/16.
Nepal said revenue shortfall will be managed through internal borrowing.
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