Government's Fiscal Performance Highlights Weakness in Revenue and Expenditure

In the first five months of the fiscal year 2081/82, the government’s financial performance has exposed significant inefficiencies in both revenue collection and expenditure. According to data from the Office of the Auditor General, only 28% of the annual revenue target has been achieved, while approximately 30% of the total budget has been spent.

The government allocated NPR 352.35 billion for capital expenditure this fiscal year. However, only 11.58% of this amount—equivalent to NPR 40.80 billion—has been utilized so far. Capital expenditure, which is crucial for infrastructure development and economic growth, is lagging far behind, reflecting inefficiencies in project implementation and fund disbursement. Delays in project approvals and lack of execution capacity are likely contributing factors to this underperformance.

Recurrent expenditure, which includes salaries, operational costs, and administrative expenses, shows relatively better progress. Out of NPR 1,140.66 billion allocated for this category, 31.87% or NPR 363.55 billion has been spent. While this is an improvement compared to capital expenditure, it suggests that a significant portion of resources is being directed toward operational needs rather than developmental activities.

Under financial management, which mainly covers public debt repayments and interest payments, the government has spent 41.32% of the NPR 367.28 billion allocated. This amounts to NPR 151.76 billion. The higher percentage spent in this category reflects the government’s focus on meeting its debt obligations, but it raises questions about the balance between debt servicing and developmental priorities.

The government had set an ambitious revenue collection target of NPR 1,471.62 billion for the fiscal year. By the end of Mangsir, only NPR 405.77 billion, or 27.57% of the target, had been collected. This shortfall in revenue collection indicates sluggish economic activity and possibly weak compliance with tax policies.

The government also targeted NPR 52.32 billion in foreign grants this year. However, no foreign grants have been received so far. This lack of external support could further strain the government’s ability to finance its developmental projects.

The data reveals an urgent need for structural reforms in financial management and policy implementation. Low capital expenditure indicates a failure to kickstart developmental projects, which are critical for long-term economic growth. Meanwhile, the significant focus on debt repayment highlights fiscal vulnerabilities and reliance on borrowing to meet budgetary needs.

Revenue collection figures also suggest a need to enhance economic productivity and improve tax compliance mechanisms. Additionally, the absence of foreign grants raises concerns about the government’s ability to negotiate and secure international financial assistance.

The government must address these challenges proactively by expediting project approvals, ensuring effective budget utilization, and fostering an environment that encourages economic activity. Without these efforts, the fiscal year’s targets risk becoming unattainable, further hampering Nepal’s economic development prospects.