Government boosts spending to revive economic activity

KATHMANDU: In a recent push to stimulate economic growth, the government has significantly increased its expenditures, with the Ministry of Finance (MoF) allocating Rs 117 billion for clearing government liabilities.

Over the past three weeks since mid-September, the government has disbursed Rs 98 billion under recurrent expenditure headings. A substantial portion of this allocation was designated for disbursing Dashain allowances to civil servants. Additionally, funds were directed toward social security payments and releasing the first installment of grants to local governments.

Furthermore, Rs 14 billion was allocated for financial management, and the ministry disbursed Rs 7.23 billion to settle outstanding payments for development projects. Contractors had long awaited the release of these funds, which had been delayed for an extended period.

This heightened government expenditure is anticipated to reinvigorate economic activities, especially as the nation grapples with an economic slowdown. An official from the MoF disclosed that the increased government expenditure has injected an additional Rs 24 billion into the banking system.

Currently, banks are grappling with an excess of liquidity due to a sharp decline in loan demand. Banks and financial institutions hold approximately Rs 470 billion in available funds for lending, while the credit-deposit ratio has dipped to 81%, and the interbank rate has decreased to 1.71%.