Income, expenditure gap further widens

 Kathmandu, Feb. 21

The gap between the government income and expenditure has further widened in a month as the improvements seen in revenue collection by January end couldn't be sustained in February this year. Economists and development experts worry that the revenue mobilisation has remained poor and income couldn't meet public expenditure despite the utilisation of less than one-fifth of the allocated capital budget.

The gap between the government income and expenditure has been negative by Rs. 120 billion. The gap was Rs. 87.6 billion in the third week of January with total government receipts of Rs. 501.3 billion and expenditure of Rs. 588.9 billion, according to the statistics published by the Financial Comptroller General Office (FCGO) – an agency under the Ministry of Finance (MoF) which is responsible for the treasury operation of the government.

The government has received Rs. 568.8 billion, in tax and non-tax revenue and grants, by Monday while total expenditure from treasury is Rs. 688.6 billion, the statistics show. Even seven months into the current Fiscal Year 2022/23, only 37.71 per cent of total annual revenue and grant estimates of Rs. 1458.6 billion is met. This includes Rs. 529.1 billion (37.71 per cent of the yearly target) of revenue and Rs. 4.8 billion grant (8.66 per cent of the target).

Meanwhile, mobilisation of capital budget has remained pathetic following the trend of previous many years with just 18.44 per cent utilisation of Rs. 380.3 per cent allocation. Recurrent expenditure, which is used to finance everyday work of the government including the salary of the employees and maintenance of facilities, stands at 46.36 per cent (Rs. 548.5 billion) of the allocation of Rs. 1183.2 billion.

Last year, the government had raised Rs. 628.8 billion in revenue during the same period which was 53.27 per cent of the total estimates. But the expenditure was only 37.69 per cent – Rs. 615.4 billion. The size of the budget in the last fiscal 2021/22 was Rs. 1632.8 billion.

It seems that the sluggish mobilisation of capital budget has given some relief to the government. If the development allocation had been fully utilised, the government would have been in greater pressure to manage the fund to finance it. Recent temporary ban on the crusher industry across the country, and significant price rise in construction materials like cement, iron bars due to the Russia invasion over Ukraine has slowed down the development works.  

Prime Minister Pushpa Kamal Dahal 'Prachanda' and Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel have been expressing serious concerns over the situation and, according to them, have been putting efforts to bring the situation back to normal.

Amidst the poor budget performance, the government has adjusted the budget and lowered the annual target of income and expenditure. During the mid-term review of the budget of the current FY 2022/23, DPM Paudel lowered the budget by 14 per cent to Rs. 1549.99 billion.

Recurrent budget is brought down to Rs. 1021.9 billion (86.37 per cent) from earlier Rs. 1183.2 billion and capital allocation of Rs. 380.3 billion is revised to be Rs.313.8 billion which is 82.51 per cent of the earlier allocation. Meanwhile, budget of financial management is adjusted to 93.05 per cent of the initial allocation of Rs. 230.2 billion.

Likewise, 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 this year.

Published in The Rising Nepal daily on 22 February 2023.