Revenue collection, expenditure less than 50% a week ahead of third quarter end

Kathmandu, Apr. 4

The government expenditure in the current Fiscal Year 2022/23 is following the modest trend of the past years.

As the statistics of the Financial Comptroller General Office (FCGO), an agency under the Ministry of Finance that keeps track of the mobilisation of government revenue and expenditures, show, the government was able to  spend only 47 per cent of the annual budget target at the time while just 100 days,  just over a quarter, are remaining to spend the remaining 53 per cent.

Then Finance Minister Janardan Sharma had announced the budget of Rs. 1793.83 billion for the current fiscal keeping the revenue target at Rs. 1403.1 billion.

In the same period, with just 10 days remaining to conclude the third quarter, of the previous year 2021/22, total expenditure of the government was 45.41 per cent. Then Finance Minister Bishnu Prasad Paudel had announced Rs. 1632.82 billion budget for the FY 2021/22 which was moderately adjusted by Sharma who took up the rein of the economy amidst dwindling economic situation in the post-pandemic scenario.

The fragmented statistics on recurrent, capital and financing this year are on par with the previous years. The government could mobilise only 25.5 per cent of the Rs. 380.38 billion earmarked for development works by Monday, April 3.

This inability to spend the capital budget has negatively impacted the supply of money to the market, liquidity in the financial system of the country and payment to the contractors against their work in development projects. Construction entrepreneurs have been saying that it has resulted in entire construction industry facing the brunt of the lack of liquidity at a time when the price of steel, construction equipment and fuel has rocketed.

Only Rs. 97.2 billion capital budget is utilised so far.

In terms of financing, Rs. 89 billion (38.6 per cent of the total target 230.2 billion) is mobilised.

This means the government has a small window to utilise a large sum of money allocated by the budget of the current fiscal year. Although Prime Minister Pushpa Kamal Dahal ‘Prachanda’ has assured the private sector that there would be improvement in budget mobilisation and project development, and directed the newly appointed ministers to pay attention to the same, there are less chances of significant reforms from the same state machinery and procedures.

Recurrent expenditure last year in the same period was at 45.41 per cent (Rs. 714.4 billion, of total allocation of Rs. 1065.2 billion).

Capital expenditure was below a quarter with the spending of Rs. 94.2 billion of the total Rs. 378 billion. Likewise, of Rs. 189.4 billion earmarked for financing, only 34 per cent was utilised.

Revenue collection has also been facing the same fate.

In the last 265 days, revenue collection stood at just 45.3 per cent. The government was able to collect Rs. 660.7 billion revenue against its total target of Rs. 1458.6 billion. It has just 100 days to meet the target which means that it should collect about Rs. 8 billion revenue in a day on an average but current mean is Rs. 3.5 billion a day.

The tax revenue has been hit hard this year. Only 43.3 per cent tax revenue of the total target of Rs. 1295.37 billion is collected. It has disturbed the overall revenue collection. Given the poor performance of the private sector, the government is unlikely to perform better in tax collection.

In the last fiscal 2021/22, more than 62 per cent target of annual tax revenue target of Rs. 1067.96 billion was met.

According to the FCGO, the government could collect 87.7 per cent of the annual revenue target of Rs. 1180.6 billion in FY 2021/22. A year before, it was 90.64 per cent of the yearly target of Rs. 1011.75 billion. 

Amidst the indication of poor budgetary performance, former FM Janardan Sharma had adjusted the annual target of budget by 14 per cent to Rs. 1544.99 billion. Recurrent budget was lowered by 13.63 per cent and capital expenditure target by 17.49 per cent.

Similarly, total revenue estimates have also been scaled down by 11.29 per cent of the total target of Rs. 1403.1 billion. Now the government aims to collect Rs. 1244.7 billion in revenue by the end of this fiscal year.

The budget was also adjusted in 2020/21by FM Bishnu Prasad Paudel by 5 per cent. 

Published in The Rising Nepal daily on 5 April 2023.