The new government is likely to face a serious pressure to manage the financial liabilities due to the pathetic revenue collection and a heavy decline in the foreign grants amid soaring government expenditure to meet its administrative costs.
The records with the Financial Comptroller General Office (FCGO) show the recurrent expenditure of the government surpassing its revenue collection in the first five months of the current fiscal year. The revenue collection fell short by Rs 28.13 billion compared to the recurrent expenditure.
During the review period, the government spent Rs 357.56 just in recurrent expenditure, which was 12 percent higher than Rs 319.11 billion spent under the heading last year.
On the other hand, the government collected revenue of Rs 329.43 billion, only one fourth of the annual target of Rs 1.403 trillion. In the next half of the fiscal year, the government will have to collect around 76 percent of its revenue target, which will be a Herculean task for the government. Last year too, the government was able to meet only around 90 percent of its revenue collection target.
The FCGO records show that the collected revenue could not meet even the administrative costs of the government. This will compel the government to depend on either borrowing or foreign grants to meet its expenditure.
The foreign grants that the government received also present a dismal picture. The government has targeted to receive foreign grants worth Rs 55.46 billion to meet the shortfall in the financial resources to meet its expenditure target for the current fiscal year. However, it has received just Rs 3.42 billion, which is 6.16 percent of the target, under the heading.
This shows the government will have to depend largely on domestic and external borrowing. In an attempt to gather domestic borrowing, Nepal Rastra Bank recently attempted to sell treasury bills of Rs 10 billion. However, the central bank was able to collect only 80 percent of the targeted amount. Treasury bills are one of the tools that are used to manage short-term financing for the government.
Shekhar Golchha, president of the Federation of Nepalese Chambers of Commerce and Industry, said in this pathetic scenario, the country is in risk of falling into a long term debt-trap. “If the government authorities do not show sensitivity on time, it is likely to take the country into a deep financial crisis,” he said.
