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NPC lowers budget ceiling for next fiscal year

NPC lowers budget ceiling for next fiscal year
The next fiscal year's federal budget will be smaller than the current fiscal year. With the government struggling to manage financial resources due to a widening gap between income and expenditure, the National Planning Commission (NPC) has set the next fiscal year's government expenditure ceiling at Rs 1688.40 billion. The ceiling set by the NPC is smaller by Rs 105.43 billion than the budget for this fiscal year. The then Finance Minister Janardan Sharma had brought the budget of Rs 1793.83 billion for FY 2022/23. However, the Finance Ministry on February 12, trimmed the budget size during the mid-term review by 13.59 percent after realizing that raising the required resources from all sources, particularly revenue and foreign aid, is unachievable. The revised budgetary allocation now amounts to Rs 1,549.99 billion from Rs 1,793.83 billion earlier. The Finance Ministry will prepare the next fiscal year's budget based on the NPC ceiling. According to NPC Member Ram Prasad Phuyal, the ceiling has been lowered for the next fiscal in view of weak revenue mobilization and the decline in foreign assistance. "The budget ceiling for the next fiscal year has been fixed after analyzing various factors such as contraction in revenue mobilization, decline in foreign loans and grants, and additional pressure on payment of the foreign debt due to fluctuation in foreign exchange," said Phuyal.

NPC estimates that the government revenue collection will total Rs 1,403 billion for the next fiscal year. The body has set foreign assistance targets (grants and loans) at Rs 201 billion and internal loans at Rs 230 billion for FY 2023/24.

Based on the ceiling, ministries will have to propose programs and projects for the next fiscal year, following which discussions will be held to finalize them. Although NPC sets the ceiling of the budget for the upcoming fiscal year, the Finance Ministry generally does not follow the recommendations of the NPC. The National Resources Estimation Committee headed by the NPC Vice Chairman Min Bahadur Shrestha has fixed the ceiling of the federal budget for the next three fiscal years. The NPC has set the budget ceiling of Rs 1,880 billion and Rs 2,088 billion for FY 2024/25 and FY 2025/26 respectively. Similarly, the revenue target for 2024/25 and FY 2025/26 has been set at Rs 1,606 billion and Rs 1,831 billion respectively. NPC has estimated that the country's economy will grow by 4.5 percent in the current fiscal year, 6 percent in FY 2023/24, 7.5 percent in 2024/24 and eight percent in 2025/26.