The current fiscal year’s budget has been reduced by the government to Rs 1.692 trillion, or 90.99 percent of the original projection. Citing low foreign loan realization, delayed capital investment, and insufficient income collection, the government cut the budget.
The government cut the budgeted expenditure by Rs 168 billion compared to the amount allotted through the annual budget when it unveiled the mid-term review of the budget for FY 2024–2025 on Thursday. The government already announced a total budget of Rs 1.860 trillion for the current fiscal year.
Every administration now routinely announces an ambitious and inflated budget, only to eventually reduce it.
The government reduced the FY 2023–2024 budget by 12.62 percent to Rs 1.530 trillion in the midst of the fiscal year last year as well.
“Over ambitious” is how Finance Minister Bishnu Prasad Paudel described the current budget’s revenue collection aim during a press conference hosted by the Ministry of Finance (MoF) on Thursday.
On May 28, 2024, Barsha Man Pun, the finance minister at the time, made the FY 2024–2025 budget announcement for the previous government, which was led by Pushpa Kamal Dahal.
“Although the government is having trouble allocating sufficient funds for capital projects, the mandatory liabilities, multi-year project payments, and sudden increases in liabilities brought on by natural disasters have put additional strain on budgetary management,” Paudel stated.
The administration cut recurrent spending by 9.76 percent to Rs 1.029 trillion while examining the overall budget size. In the same vein, the capital spending goal was lowered from Rs 352.35 billion to Rs 299.50 billion. Only 18.29 percent (Rs 64.46 billion) of the funds allotted for development projects were spent by the government in the nearly seven months of the current fiscal year.
The MoF claims that the prolonged economic downturn is the primary reason why the government has been having trouble reaching its tax-collecting goal. The government lowered the income collection target from Rs 1.419 trillion to Rs 1.286 trillion, or Rs 133 billion, during the mid-term review. Furthermore, the objective for external borrowing has been lowered by 16.92 percent to Rs 180.83 billion.
The government has fallen short of the goal, despite revenue collection rising 12.7% in the first half of the current fiscal year compared to the same period in the previous fiscal year. According to the budget analysis, it is because of the inflated goal that was set for this year.
For the current fiscal year, the yearly budget aims to attain a six percent economic growth rate. But the government is also likely to fall short of the growth goal. The National Statistics Office reports that in the first quarter of this year, the nation’s economic growth rate was a mere 3.4 percent.
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