With the government struggling to strike a balance between income and expenditure, the budget has widened further. The statistics of the Financial Comptroller General Office (FCGO) show the government’s federal budget is in deficit by Rs 422bn.
The budget deficit has increased as revenue could not be collected as targeted while liabilities increased in areas of salary, pension, social security allowances, and domestic & external debts among others.
According to the latest statistics of the Financial Comptroller General Office (FCGO), the government’s expenditure reached Rs 1383.55bn by July 11 while the income totaled Rs 960.83bn.
The government has been able to meet only 64.5 percent of the revenue target with only four days left to end the current fiscal year while the total expenditure has reached 77.13 percent of the annual target.
According to Finance Ministry officials, the budget deficit may exceed Rs 5bn by the end of the fiscal year, and there is a possibility that the government treasury account will be negative by Rs 1.5bn. The government’s treasury account has already become negative by nearly Rs 1bn. According to Nepal Rastra Bank, the government's treasury account has become negative by Rs 98.85bn.
Since the beginning of Ashad, the last month of the fiscal year, the government has stopped all large payments including Rs 80bn meant for public works.
Such is the state that the government has used the resources allocated for capital expenditure to pay the interest on the loans. Rs 36bn was earmarked for development projects such as Budhigandaki Hydropower Project, Nijgadh International Airport, and Kathmandu-Tarai Expressway.
After the money collected from its revenue collection was not enough to pay for the salaries of the government employees and to cover the administrative expenses, the government has for the first time taken the money from the development budget and spent it to pay the interest on the loan. Rs 36bn earmarked for development projects including Budhigandaki, Nijgadh Airport, and Kathmandu-Nijgadh Fast has been transferred to pay the principal and interest of the loans.
Finance Ministry officials admitted that the amount was transferred from other titles to pay the principal and interest of the internal loans since the amount allocated for paying loans remained insufficient due to the surge in the interest rates this year.
The dramatic decline in revenue forced the government to trim the federal budget of Rs 1.793trn by 14 percent to Rs 1.549trn through the mid-term review of the budget.
The non-improvement in revenue collection has been a worrying factor for the government which is struggling to meet the expenses. As of July 11, revenue collection totaled Rs 940.90bn, of which Rs 818.52bn is tax revenue and Rs 86.46 is non-tax revenue.
The decline in imports has hit the revenue collection hard. According to the Department of Customs (DoC), revenue from imports has declined by 23 percent in the first 11 months of the current fiscal year compared to the same period of the last fiscal year. DoC collected revenue worth Rs 344.03bn till mid-June, which was Rs 446.79bn a year ago.
The country’s total imports have declined by 16 percent in the review period. Nepal has imported goods worth Rs 1,480.98bn in the first 11 months of FY 2022/23 compared to Rs 1,763.22bn during the same period of FY 2021/22.
Dhaniram Sharma, spokesperson of the Finance Ministry accepted that the budget deficit in this fiscal will be a bit bigger than in earlier years. It is seen that there will be a budget deficit this year.
