Government revenue falls short by half in fiscal Q3

KATHMANDU: As the third quarter of the fiscal year 2023/24 draws to a close, the government finds itself grappling with a significant shortfall in revenue collection. According to the latest report from the Financial Comptroller General Office, only Rs 720.67 billion has been collected as of Wednesday, representing a mere 50.66 percent of the projected amount of Rs 1.422 trillion for the fiscal year.

The shortfall in revenue can be attributed to several factors, including a slowdown in economic activities, government inefficiencies in capital expenditure, and sluggish lending by banks. Despite efforts to revise targets, the government is unlikely to meet even the revised revenue collection goal for the year.

Initially maintaining the revenue collection target at Rs 1.422 trillion in the annual budget, the government later slashed this figure to Rs 1.309 trillion through a mid-term review due to slow collection progress.

Tax revenue collection also lags behind, standing at just 49.85 percent of the target of Rs 1.305 trillion. Non-tax revenue and grants are similarly below expectations, with only Rs 69.85 billion collected against a target of Rs 117.06 billion, and grants totaling a mere Rs 2.75 billion against an estimated Rs 49.94 billion.

Despite setting an ambitious target, the government has only managed a meager nine percent increase in revenue compared to the previous fiscal year. Despite reassurances from the new government alliance regarding effective revenue mobilization, practical results have yet to materialize.

In the past month under Finance Minister Barshaman Pun’s leadership, the government has collected Rs 101.22 billion in revenue. Meanwhile, capital expenditure stands at a mere 31.4 percent, significantly below the targeted Rs 302.07 billion for spending on development projects.

Of the total expenditure of Rs 901.21 billion during the review period, Rs 640.67 billion went towards recurrent expenditure, while Rs 165.67 billion was allocated for financial management to settle liabilities under public debt.

With the fiscal year’s third quarter nearly concluded, the government faces mounting pressure to address revenue shortfalls and expedite capital expenditure to meet development targets.