Expenditure outstripping revenue alarms govt, private sector

Kathmandu, Jan. 3

The government has failed to raise the revenue collection even more than two months since the expenditures surpassed its income by the end of the first trimester of the current fiscal year 2022/23. Collected revenue is not sufficient even to cover the recurrent expenditure that includes payments for goods and services, salaries, interest payments and subsidies except for capital assets.

By Monday, the government could collect Rs. 356.8 billion in revenue including tax and non-tax revenue, grants and other receipts, which is 26.75 per cent of this year's total revenue target of Rs. 1458.6 billion. But the total expenditure is Rs. 503.6 billion – 28 per cent of the total budget of Rs. 1793.8 billion, according to the statistics published by the Financial Comptroller General Office (FCGO).

Likewise, recurrent expenditure has reached Rs. 396.8 billion which is Rs. 40 billion higher than the revenue collected by January 2, Monday.

By the end of the third month of this fiscal in mid-October, the income and expenditure of the government remained at Rs. 232.5 billion and 278.3 billion respectively, creating a significant gap of Rs. 45.8 billion between the receipts and expenses.

This gap between the income and expenses has climbed to Rs. 113.5 billion as only 12 days are left to end the second trimester of this year. This widening gap has troubled both government and private sector. If this gap continues to widen, the government won't have enough funds to pay salaries and pensions of the employees and it has to raise loans to finance the everyday functions of the state agencies.

Meanwhile, the utilisation of the budget earmarked for the development projects has also remained poor with expenses of just 11.39 per cent – Rs. 43.3 billon of Rs. 380.3 billion target.

Responding to the situation, Prime Minister Puspa Kamal Dahal Prachanda expressed worries over the situation and said, "Only 25 per cent revenue is collected even when the first half of the year is nearing its end. I am reported that the recurrent expenditure is 33 per cent while development expenditure has remained at a meagre 11 per cent only."

He directed the secretaries of the federal ministries on Tuesday to find the reasons behind the poor revenue mobilisation.

He asked them to prepare plans by incorporating the alternatives to expedite the physical and financial progress of the large projects. PM Prachanda also asked them to connect the performance of the high government officials, especially the project chiefs, with their work performance evaluation.

According to the FCGO, the government has spent more money in debt servicing and investment than in development projects. Total expenditure of the government includes Rs. 396.8 billion in recurrent, Rs. 43.3 in capital expenditure and Rs. 63.4 billion in financing.

Similarly, income of the government is Rs. 329.5 billion in tax and Rs. 27.2 billion in non-tax revenue, Rs. 3.4 billion in grants and Rs. 29.8 billion in other receipts.

During the same period in the last fiscal year 2021/22, the government had collected Rs. 448.9 billion in revenue and Rs. 496.1 billion in total receipts. Likewise, total expenditure from treasury was Rs. 444.2 billion – including Rs. 361.1 billion in recurrent, Rs. 37.4 billion in capital expenditure and Rs. 45.5 billion in financing. 

Published in The Rising Nepal daily on 4 January 2023.