Revenue collection reaches Rs 578.94 billion by Mid-January, Limited to 81.4pc of target

KATHMANDU: Nepal’s revenue mobilisation has fallen short of targets in the first half of the current fiscal year 2082/83, with government collections remaining below expectations amid sluggish economic activity and weak imports.

According to data released by the Ministry of Finance, total revenue collection stood at Rs 578.94 billion by Poush-end (mid-January). This represents only 81.4 percent of the revenue target set for the period.

For the current fiscal year, the government has set an ambitious annual revenue target of Rs 1.48 trillion. Of this, Rs 711.21 billion was projected to be collected by the end of Poush. However, the actual collection has remained more than Rs 132 billion below the half-year target, underscoring persistent pressure on public finances.

Monthly performance relatively stronger

Despite the overall shortfall, revenue performance in Poush alone was relatively better compared to earlier months of the fiscal year. The government had targeted revenue collection of Rs 190.77 billion during the month. Actual collection reached Rs 169.16 billion, equivalent to 88.67 percent of the monthly target.

Official figures show that revenue inflows surged toward the end of the month, with Rs 17.80 billion collected on Poush 30 alone. This late-month acceleration, however, was insufficient to offset cumulative underperformance in the preceding months.

Year-on-year comparison shows slow momentum

A comparison with the same period of the previous fiscal year 2081/82 also indicates that revenue growth has not gathered the desired momentum. In 2081/82, the government had set an annual revenue target of Rs 1.4193 trillion. By Poush-end of that fiscal year, the target was Rs 672.81 billion, while actual revenue collection stood at Rs 567.40 billion.

During Poush alone in 2081/82, revenue collection amounted to Rs 161.62 billion, slightly lower than the current year’s Poush collection in absolute terms. However, officials note that the overall pace of revenue mobilisation this year has not improved significantly, despite marginally higher monthly collections.

Structural and macroeconomic constraints

Officials and analysts attribute the revenue shortfall to a combination of structural and macroeconomic factors. Slower-than-expected expansion of economic activities, continued weakness in imports, subdued domestic consumption, and long-standing challenges within tax administration have all weighed on revenue performance.

Import-related taxes, which constitute a significant share of Nepal’s revenue base, have been particularly affected due to subdued trade volumes. At the same time, limited private sector investment and cautious consumer spending have constrained growth in internal revenue sources.

The government has expressed cautious optimism that revenue collection could gain momentum in the coming months if capital expenditure accelerates and overall economic activity improves. Authorities believe that improved execution of development spending and a gradual recovery in demand could strengthen the revenue base in the second half of the fiscal year.

However, with less than one-third of the annual revenue target collected in the first six months, sustaining fiscal discipline and managing expenditure pressures are expected to remain key challenges for the government in the remainder of fiscal year 2082/83.