Revenue collection, capital expenditure less than 70%

By Laxman Kafle,Kathmandu, July 18: The revenue collection and capital expenditure of the government shrank in the last fiscal year 2022/23.

The statistics of the Financial Comptroller General Office under the Ministry of Finance showed that revenue collection of the government has declined during the last fiscal year 2022/23 as compared to the fiscal year 2021/22.

The government has collected revenue of Rs. 957.15 billion during the last fiscal year 2022/23. 

Around Rs. 865.6 billion has been raised from the tax revenue and Rs. 91.5 billion from non-tax revenue during the review period.

The revenue collection is limited to 68.21 per cent of the annual target of Rs. 1,403.14 billion in the last fiscal year 2022/23.

The revenue collection is 9.66 per cent (Rs. 102.38 billion) lower than the previous fiscal year.

The revenue of Rs. 1,059.53 billion was collected in the previous fiscal year 2021/22. During that time, Rs. 976.3 billion had been raised from tax revenue while Rs. 83.1 billion was raised from non-tax revenue.

During the last fiscal year, around Rs. 21.2 billion had been received as grant and Rs. 53.2 billion as other receipts.

In the previous fiscal year 2021/22, the government received Rs. 18.18 billion as grant and other Rs. 48 billion as other receipts.

For the first time, revenue has fallen short to cover even the recurrent expenses this year.

Due to dependence on imports and the restriction measures imposed on imports to improve foreign currency reserves, revenue collection has been affected, said the Ministry of Finance.

The import control measures and the slowdown in economic activity have had a negative impact on revenue growth, said economist Dr. Chandramani Adhikari.

“The country faced a revenue deficit for the first time this fiscal year. Revenue deficit reached around Rs. 48 billion in last fiscal year 2022/23. It showed that the performance of revenue collection has become weak,” he said.

Talking about the revenue target for the current fiscal year 2023/24, Dr. Adhikari said that there will be challenges for the government to meet the revenue target of Rs. 1,248 billion from the existing tendency of spending budget.

He, however, said that the target of revenue mobilisation can be met if the government spends the budget effectively focusing on capital budget expenditure, bring monetary policy flexible targeting to private sector credit and ease the import by using the foreign currency reserves properly.

Budget deficit reaches Rs. 400 billion

Meanwhile, the budget deficit of the government has reached about Rs. 400 billion in the last fiscal year.

In the last fiscal year, the government collected revenue of Rs. 957.15 billion, grants of Rs. 21.29 billion and other receipts of Rs. 53.24 billion. In this way, government income reached Rs. 1,031.69 billion, while expenditure reached Rs. 1,429.5 billion.

During the review period, the capital expenditure has remained low even in the last fiscal year despite the government introducing fiscal budget in time.

The capital expenditure stands only at 61.44 per cent of the total allocation by July 16, 2023.

Of the Rs. 380.38 billion 

allocated under the capital expenditure, only Rs. 233.69 billion has been spent by July 16.

However, the rate of capital expenditure is higher during the last fiscal year as compared to previous fiscal year. Only 57 per cent (Rs. 216.2 billion) of the total allocation of Rs. 378 billion was spent in the previous fiscal year 2021/22.

Likewise, the recurrent expenditure of the government reached 85 per cent (Rs. 1005.75 billion) in the last fiscal year. The government had allocated a budget of Rs. 1,183.2 billion under the recurrent expenditure in the last fiscal year.

The sluggish pace of work in the national pride projects as well as other projects has resulted in the poor capital expenditure, said Dr. Adhikari.

"Weak project preparation, lack of effective project monitoring and hurdles seen during the project implementation are major reasons for the low capital expenditure this year too," he said.

Earlier, after the revenue collection was inadequate to meet even recurrent expenditure, the Finance Ministry has decided to cut the budget for the federal government.

Around 20 per cent of the budget approved for all ministries and agencies under different headings like fuel, repair works, printing and information publication, information system and software operating costs, travelling and other allowances and programme expenses have been cut.

During the last fiscal year, the government has spent Rs. 190 billion (82.58 per cent) of the total allocation for principal and interest payment.

The government had unveiled a budget of Rs. 1,793.8 billion for the current fiscal year in May last year.

Reviewing the budget for the current fiscal year midway, the government has reduced the size of budget by Rs. 244 billion. The new government has downsized the budget by 14 per cent.

The then Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel reduced the size of the current fiscal year's budget to Rs. 1,549 billion.