First Business News Portal in English from Nepal
KATHMANDU: The federal government’s cumulative loss, which as of mid-May this year reached Rs 88.35 billion, has put pressure on the government to rely more on borrowing for its ongoing operations.
The financial records of Nepal Rastra Bank (NRB) show that during the same period last year, the government had a surplus of Rs 104.20 billion in its treasury.
Since the start of the current fiscal year, the government has been under pressure to improve financial management as a result of a significant decline in revenue collection.
To address the negative balance in the foreign sector indicators last year, the government placed an import ban that lasted for ten months.
The government has been dealing with a severe shortfall in revenue collection as a result of a decline in imports.
In comparison to the review period last year, the government report states that this year’s revenue collection has decreased by 13%. In order to meet its financial obligations, the government was forced to obtain overdraft loans from NRB.
Due to a lack of funding, the federal government has only distributed half of the third installment’s funds intended for provincial and local governments.
The sub-national governments have been under pressure due to a declining surplus in their treasuries, in addition to the federal government’s growing accumulated loss.
The government has a cumulative loss of Rs. 45.38 billion when the financial standing of all 761 governments is taken into account.
Economists predict that if local government reserve funds, as well as the overall condition of government reserve funds, turn negative, the government will be forced to take out overdraft loans from the NRB. .
The government had only received 64% of the desired revenue as of mid-May this year. Similar to the foreign grant amount, which was less than expected at over Rs 38 point 46 billion, at only Rs 7 point 22 billion.
The government borrowed 179 point 70 billion rupees domestically and 64 point 91 billion rupees from abroad during that time.
The law states that in cases of severe financial difficulty, the government may borrow up to 5% of the total revenue collected as an overdraft.
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