Amid slow revenue collection, 17.24 percent of public expenditure was exhausted for debt service
KATHMANDU, March 15: Nepal faced a budget deficit of Rs 137.75 billion in the first eight months of the current fiscal year due to a surge in financial liability on debt service of the government.
The records with the Financial Comptroller General Office (FCGO) show that the government spent Rs 801.58 billion during mid-July 2023 and mid-March 2024. On the other hand, the government generated total receipts of only Rs 663.83 billion over the period.
Mainly since the commencement of the fiscal year 2023/24, with a shortfall in revenue collection, the government has been heavily relying on domestic borrowing to manage its financial liabilities. While Nepal’s public debt has surged to Rs 2.4 trillion, the figure jumped more than double in the past five years.
As a result, the government has been increasingly depending on public borrowing to manage its expenditure. In addition, the government has failed to maintain fiscal discipline despite its commitment to effectively implement austerity measures.
Out of the public expenditure made in the review period, the government spent Rs 138.25 billion for interest and principal repayment of its public debt. It makes up 17.24 percent of the total expenditure.
The government has targeted to collect Rs 1.422 trillion in revenue in the current FY. In the first eight months, the revenue collection stood at only 44.92 percent of the annual target. Although the government targeted to generate Rs 549 billion in customs revenue and Rs 361 billion in inland revenue, the realization fell short of the government’s projections.
The government collected Rs 578.67 billion in taxes, which was 44.33 percent of the annual target. In terms of grants, the government received only 5.52 percent of its target of Rs 49.94 billion.
Economist and a lawmaker of Rastriya Swatantra Party, Swarnim Wagle said the government cannot meet its target of revenue collection by the end of the current FY. “As the country is reeling under critical conditions of public finance, the government needs to consider a fact-based budget rather than a populist one while formulating the budget for the next fiscal year,” said Wagle, speaking at a parliament meeting on Thursday.
Meanwhile, the government spent only Rs 81.21 billion out of its annual projection of Rs 302.07 billion in capital expenditure. The FCGO records show the government needs to exhaust around 73 percent of the amount in just the next four months, if it is to fully utilize the funds aimed for the development projects.
