Nepal's Fiscal Snapshot: Revenue Collection at 60%, Capital Expenditure Trails Behind

Kathmandu, April 24, 2025 (Baisakh 11, 2082)

The Financial Comptroller General Office (FCGO) under Nepal’s Ministry of Finance has released its latest update on government finances. As of 2082-01-11 (April 24, 2025), the Government of Nepal has achieved 60.35% of its total revenue target while utilizing 55.81% of its total budgeted expenditure.

1. Revenue Collection Overview

The Government has collected NPR 8.57 trillion out of the total annual revenue target of NPR 14.19 trillion, marking 60.35% progress. This reflects a moderately healthy pace in the context of the economic environment but leaves room for improvement in certain areas.

a. Tax Revenue – NPR 7.66 Trillion (59.68%)

Tax revenue continues to be the largest contributor to the national budget. Out of NPR 12.84 trillion targeted, the collection has reached 59.68%. The performance indicates stability but shows a slight lag, potentially caused by slower business growth, import reductions, or tax compliance issues.

b. Non-Tax Revenue – NPR 0.90 Trillion (66.68%)

Non-tax revenue has outperformed tax revenue in terms of percentage collection, with NPR 0.90 trillion collected against the target of NPR 1.35 trillion. This includes fees, fines, interest, and dividends from public enterprises. The better-than-average collection might indicate effective income generation from state-owned bodies or efficient administrative revenue systems.

c. Grants – NPR 0.025 Trillion (4.9%)

Foreign grants—a vital support for Nepal’s development—have underperformed severely, with only 4.9% of the targeted NPR 0.52 trillion realized. This indicates delays in fund disbursement from donors or inefficiencies in program execution and reporting, which need urgent redressal.

d. Other Receipts – NPR 0.98 Trillion

Interestingly, the government recorded NPR 0.98 trillion under "Other Receipts," despite having no initial budget target in this category. These funds might stem from asset sales, returned funds from provinces, or one-time financial recoveries. Clarification is needed for accountability.

2. Total Receipts – NPR 8.69 Trillion (59.05%)

Combining revenue, grants, and other receipts, the total government inflow has reached 59.05% of the planned NPR 14.71 trillion. This is an important benchmark, but it also highlights that more than 40% of the total revenue still needs to be mobilized in the final quarter of the fiscal year.

3. Government Expenditure – NPR 10.38 Trillion (55.81%)

On the expenditure side, 55.81% of the budgeted NPR 18.60 trillion has been spent. The allocation includes recurrent, capital, and financing expenses.

a. Recurrent Expenditure – NPR 7.03 Trillion (61.63%)

Recurrent expenditure, which includes salaries, pensions, and daily administrative costs, has reached 61.63%. This is consistent with past trends and shows the government's ability to meet regular obligations. However, high recurrent spending without parallel capital investment may hinder growth potential.

b. Capital Expenditure – NPR 1.07 Trillion (30.48%)

Capital spending, which funds infrastructure and development projects, is worryingly low at 30.48% of the targeted NPR 3.52 trillion. This reflects ongoing issues in project execution, such as delayed tender processes, poor planning, and slow implementation. This persistent challenge threatens Nepal’s development ambitions.

c. Financing Expenditure – NPR 2.27 Trillion (62.01%)

Financing expenditure, including debt repayment and investments in public enterprises, has reached 62.01%, showing the government’s commitment to honoring its financial obligations. This helps maintain fiscal credibility and macroeconomic stability.

4. Fiscal Balance and Future Outlook

The current balance between receipts and spending is moderately healthy. However, two major issues stand out:

1. The underperformance in capital expenditure, which could stall economic development and delay critical infrastructure projects.

2. The low realization of foreign grants, which may point to weak aid coordination or donor confidence.

If not addressed promptly, these gaps could lead to missed development targets and reduced public service delivery.