First Business News Portal in English from Nepal
KATHMANDU: In response to a substantial revenue collection shortfall, the government is facing mounting pressure to downsize the projected expenditure for the current fiscal year.
Data from the Financial Comptroller General Office reveals that, in the initial six months of the fiscal year, the government amassed only Rs 518 billion in revenue, less than half of the targeted Rs 1.422 trillion for the fiscal year 2023/24.
Contrastingly, expenditures reached Rs 566 billion by mid-January, resulting in a negative balance of Rs 48 billion in the state treasury. During the review period, the state’s reserve funds dipped into negative territory by Rs 150 million.
An official from the Ministry of Finance (MoF) disclosed that the government is contemplating a reduction of around Rs 250 billion in the projected expenditure through a half-yearly review of the current fiscal year’s budget.
The estimated budget of Rs 1.751 trillion is likely to be scaled down to approximately Rs 1.5 trillion, according to the source.
Notably, in the previous fiscal year, the government reduced the budget size by 14 percent through a half-yearly review, bringing it down to Rs 1.549 trillion from Rs 1.793 trillion.
To assess the progress of budget implementation, the MoF has established a task force led by Uttar Bahadur Khatri, chief of the Budget Division at the finance ministry.
The five-member committee is mandated to evaluate projects based on their progress reports and decide on their continuity. Projects that have not progressed to the tender process and contract award by the second quarter of the fiscal year are likely to face discontinuation in the mid-term review.
Compounded by poor revenue collection, the government has increasingly relied on loans from domestic and foreign sectors. The government’s public debt surged by approximately Rs 72 billion as of mid-December, bringing the total public debt liability to Rs 2.37125 trillion, comprising Rs 1.197 trillion in internal debt and Rs 1.173 trillion in external debt.
The anticipated reduction in the budget size is seen as a measure to curb the escalating public borrowing of the country.
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