Government Revenue And Capital Expenditure Decline In FY 2022/23
July 18, 2023 | Investopaper
The latest statistics from the Financial Comptroller General Office, under the Ministry of Finance, have revealed a concerning trend for the Nepalese government’s financial health in the fiscal year 2022/23. Revenue collection and capital expenditure both experienced a downturn during this period.
During the last fiscal year 2022/23, the government’s revenue collection totaled Rs. 957.15 billion. However, this amount fell significantly short of the annual target of Rs. 1,403.14 billion, reaching only 68.21 percent of the goal. This figure also represented a decrease of 9.66 percent (Rs. 102.38 billion) compared to the previous fiscal year.
Of the total revenue collected, approximately Rs. 865.6 billion came from tax revenue, while Rs. 91.5 billion was generated through non-tax revenue. The decline in revenue was attributed to several factors, including import dependence and the imposition of import restrictions to improve foreign currency reserves.
The slowdown in economic activity, along with the import control measures, further contributed to the decline in revenue growth. For the first time, revenue fell short even to cover recurrent expenses, leading to a revenue deficit of around Rs. 48 billion.
In addition to the revenue shortfall, the government also faced a budget deficit of about Rs. 400 billion in the last fiscal year. The government’s income reached Rs. 1,031.69 billion, while expenditures amounted to Rs. 1,429.5 billion.
Despite introducing the fiscal budget on time, the capital expenditure remained low, reaching only 61.44 percent of the total allocation as of July 16, 2023. Of the Rs. 380.38 billion allocated for capital expenditure, only Rs. 233.69 billion had been spent. However, this year’s capital expenditure rate showed improvement compared to the previous fiscal year, where only 57 percent (Rs. 216.2 billion) of the total allocation was spent.
The sluggish pace of work in national pride projects and other initiatives contributed to the underutilization of the capital expenditure budget. Weak project preparation, inadequate project monitoring, and implementation hurdles as major reasons for the low capital expenditure.
In response to the insufficient revenue collection to cover recurrent expenses, the Finance Ministry took action by cutting the budget for the federal government. Around 20 percent of the budget approved for various ministries and agencies, under headings such as fuel, repair works, printing and information publication, information system and software operating costs, travelling and other allowances, and program expenses, were reduced.
As the government faces these financial challenges, effective financial planning and prudent utilization of resources will be crucial to achieving economic stability and ensuring progress in the country’s development.
