Kathmandu, March 4: The government has started preparations for the budget for the next fiscal year. Government agencies have begun groundwork for the budget that will be presented by the government formed after the election.
Although the current fiscal year introduced a budget of Rs 1.964 trillion, the government estimates that only Rs 1.688 trillion will actually be spent. Considering limited resources and weak spending capacity, the Resource Estimation Committee, led by the vice chairperson of the National Planning Commission, has set a ceiling of Rs 1.89 trillion for the fiscal year 2026 to 2027.
This is Rs 76 billion, or about 4 per cent, lower than the budget for the current fiscal year.
The mid-term Expenditure Framework for fiscal years 2025 to 2027 had projected a budget of Rs 2.128 trillion for the coming year. Based on that projection, the new ceiling is 12.5 per cent lower.
The framework published on May 29 had estimated that next year’s budget would grow by 8 percent compared to the current fiscal year. Under normal circumstances, since elections had taken place, the next budget would have been the last budget before the election.
In Nepal’s 75-year budget history, the size of the budget has been reduced only in two fiscal years compared to the previous year.
Due to shrinking resources during the COVID period, the budget size was reduced by 3.7 per cent in fiscal year 2020 to 2021 compared to the previous year. In fiscal year 2023 to 2024, the budget size was also reduced by 2.3 per cent.
Vice Chairperson of the National Planning Commission, Dr Prakash Shrestha, said the ceiling was set not on the basis of the allocated budget but on the amount the government can realistically spend and the resources actually available.
“We set the ceiling based on what we can actually spend and the real availability of resources, not on the size of the current budget,” Shrestha said. “Out of the Rs 1.964 trillion budget for the current fiscal year, only about Rs 1.688 trillion is expected to be spent. Even that may or may not be fully spent. On the other hand, the ceiling was lowered because revenue growth is weak and mobilisation of foreign resources has also remained low.”
In recent years, the mobilisation of foreign resources has remained below 50 per cent of the government’s projections. Revenue collection has also reached only around 80 per cent of the target.
The government had estimated that Rs 1.48 trillion would be collected as revenue in the current fiscal year. This was 26 per cent higher than the actual revenue collected last year.
But the growth rate so far stands at only 5.6 per cent.
Except for a few unusual years, revenue growth in the past has generally remained above 25 per cent.
Revenue forms the largest share of the government’s budget resources. Grants from donor agencies and public borrowing are added to it to finance the budget.
A budget is an estimate of income and expenditure for a fiscal year. Yet in recent years, the government has repeatedly failed to estimate spending accurately.
There has been a widening gap between projected revenue and actual collection, which shows weaknesses in the government’s resource estimation.
As revenue projections continue to miss targets, the government’s accumulated deficit has increased, and budget implementation has also suffered.
According to data from the Ministry of Finance, the gap between projected and actual revenue started widening from fiscal year 2018 to 2019.
People’s News Monitoring Service
Comments:
Leave a Reply