Only 9.8 percent of development budget spent in four months

The government has once again failed to accelerate capital spending.

According to the Financial Comptroller General Office, only 9.8 percent of the capital budget allocated for the current fiscal year has been utilized. Out of the Rs 352.35bn allocated for capital expenditure in 2024/25, just Rs 34.53bn was spent in the first four months.

Low capital budget utilization has been a persistent issue in Nepal. In the previous fiscal year (2023/24), the government managed to spend only 63.47 percent of the allocated budget for development projects. Only Rs 191.73bn out of the Rs 302bn set aside was utilized in the review period.

Capital expenditure has consistently slowed since the Covid-19 pandemic. In 2021/22, only 57.23 percent of the development budget was spent. Capital spending improved to 61.44 percent in 2022/23 and 63.47 percent in 2023/24. Over the past four years, the average capital expenditure has hovered around 60 percent. Current spending trends suggest that 2024/25 will follow a similar trajectory.

Before the pandemic, Nepal achieved higher capital spending rates, averaging around 70 percent. Capital expenditure stood at 76.93 percent in 2018/19 and 80.77 percent in 2017/18.

Meanwhile, progress in recurrent expenditure has been satisfactory. The government spent Rs 292.52bn, or 25.65 percent of the Rs 1,140bn allocated for recurrent expenditure, in the first four months of 2024/25.

Overall, of the Rs 1,860.3bn allocated for the current fiscal year, Rs 415.02bn, or 22.21 percent of the allocation, has been spent so far. Similarly, out of Rs 367.28bn allocated for financial management, Rs 87.96bn has been utilized.

Revenue mobilization has remained another pressing issue for Nepal over the past few years. The government raised Rs 329.01bn in the first four months of 2024/25. The collection is 22.36 percent of the Rs 1,471.62bn that the government has targeted to raise in the current fiscal year. This indicates that Nepal is likely to miss its revenue targets once again.

In 2023/24, revenue collections, including amounts to be transferred to provincial and local governments, reached only Rs 1,058.89bn, falling short of the Rs 1,422.54bn target by 25.56 percent, or Rs 363.64bn. The shortfall in 2022/23 was even higher at 31.77 percent.

Foreign aid mobilization has shown no progress this fiscal year. The government has set a target to raise Rs 52.32bn through foreign aid and grants in the current fiscal year but has not secured any funds so far, according to the FCGO.