According to the mid-term review released by the government on Sunday, the overall economic growth is expected to be less than 4 percent as opposed to budgetary target of 5.5 percent. [break]
The review blamed pessimistic agricultural production, particularly monsoon crops, for the low GDP growth rate. The agriculture section is expected to grow by around 1 percent whereas budgetary estimate was 3.3 percent, said Yubaraj Khatiwada, vice-chairman of National Planning Commission.
Rising inflation that has crossed 10 percent has also come as a challenge for the government that initially had planned to limit it within 7 percent. But bright part has been that the government is expecting to mobilize a record Rs 13.1 billion more revenue than budgetary target, thanks to robust reforms in revenue administration.
The government is anticipating to collect a total of Rs 189.6 billion in revenue, a growth of 32.14 percent compared to the real mobilization recorded last year, stated the review.
The budget review also predicted the total expenditure to be Rs 272.5 billion, 95.32 percent of the expected expenditure, but recurrent expenditure is expected to touch Rs 168.8 billion, which will be over 5 percent more than allocated for this year.
Despite rigorous efforts made by the government, the capital expenditure, which mainly finances development activities, is expected to be less than 80 percent of the allocated budget due mainly to slow implementation of mega projects.
"There is also the need to bring the fiscal budget before the begging of fiscal year so that development projects can go into implementation right after the start of a fiscal year," underlined the review report.
Budget deficit is expected to squeeze to Rs 82.9 billion from initial expectation of Rs 109.4 billion. The government is planning to get Rs 15 billion worth of foreign loan while it aims to collect 83 percent of the planned internal loan for current year.
The report also highlighted soaring demand of non-budgetary expenditure that has touched Rs 32 billion by the first half of the current fiscal year as a major challenge for maintaining financial discipline. It also raised concern over the continuing liquidity shortage despite higher growth of money supply.
"The government is closely watching the liquidity crunch situation and is committed to take every possible action to ease liquidity to ensure enough flow of funds to the productive sector," said Finance minister Surendra Pandey.
The report also stressed upon the need to boost exports to deal with the widening trade deficit and to correct high deficit in the balance of payments. There is an urgent need use diplomatic channel to remove various additional duties that are being imposed on Nepali exports to India, stated the review.
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