Budget slashed to 1.38 trillion

Kathmandu, Feb. 12

The government has revised the expenditure target for the current fiscal year 2019/20 and brought it down to Rs. 1,385.9 billion.

Finance Minister Dr. Yuba Raj Khatiwada slashed his budget of Rs.1,532.9 billion by 9.6 per cent in its mid-term review announced on Wednesday.

This is the third time Dr. Khatiwada has revised the estimates of government income and expenditure, of which the first was announced by Krishna Bahadur Mahara while the latter two were his own budgets.

According to the revised estimates of the budget, recurrent expenditure will stand at Rs. 904.4 billion, capital expenditure Rs. 326.8 billion and financial provision Rs. 154.7 billion. The revised estimates of recurrent and capital expenditure and financial provision are 94.5 per cent, 80.1 per cent and 92.2 per cent respectively than the actual allocation.

In his budget announced in May 2019, Dr. Khatiwada had allocated Rs. 957.1 billion for recurrent expenditure, Rs. 408.05 billion for development expenditure and Rs. 167.8 billion for financial management. The share of recurrent and capital expenditure and financial management was 62.4 per cent, 26.6 per cent and 11 per cent respectively.

Of the total budget of Rs. 1.53 trillion, the government had mobilised Rs. 422.5 billion in the first six months of the current fiscal year (mid-July to mid-January). This is 27.6 per cent of the total budget.

Similarly, the total recurrent and capital expenditure is Rs. 309.6 billion and Rs. 62.7 billion and financial provision is Rs. 50.1 billion – 32.4 per cent, 15.4 per cent and 29.9 per cent respectively.

However, the expenditure from the government resources has increased by 6 per cent, foreign grant by 84 per cent and foreign loan by 79.2 per cent, said FM Dr. Khatiwada.

“We expect that the expenditure will reach 32.5 per cent by February 12,” he said.

According to him, expenditure remained poor in some areas like reconstruction, state and local level governments.

“Since the reconstruction of private houses has reached the final stage, reconstruction budget is less than Rs. 14.1 billion than previous year. The government also could not spend Rs. 10 billion allocated to the Millennium Challenge Account Nepal due to the delay in ratifying the agreement from the federal parliament,” said the minister.

Some of the local bodies have managed their expenditure from the funds from the previous year which resulted in the mobilisation of the budget less than Rs. 18 billion. Similarly, budget of some of the large projects is stuck in absence of implementation modality, working procedure and money allocation.

Finance Minister Dr. Khatiwada also slashed revenue collection to 95.6 per cent.

But revenue collection has witnessed a growth of 13.4 per cent compared to the first six month of the last fiscal year 2018/19 and reached Rs. 456.1 billion. The decreased import has directly affected the revenue collection. However, internal revenue collection has witnessed a 26 per cent growth which the FM has termed ‘encouraging’.

Dr. Khatiwada said that the provisions were made to return the unspent money given to the subnational governments as per conditional, matching and special grant back to the consolidated fund. Additional funds will be mobilised on the basis of the progress made in the projects handed over to the state and local governments.

“The government has implemented Economic Procedure and Fiscal Accountability Act, established National Project Bank and institutionalised the mid-term expenditure framework (MTEF),” said the minister.

In order to improve the budget expenditure, the government has also introduced the multi-year tender standards, Sub-national Treasury Regulatory Application (SuTRA) in 677 local bodies and Computerised Government Accounting System in 2,876 government offices. Likewise, Electronic Fund Transfer is executed across the country.

Published in The Rising Nepal daily on 13 February 2020.