The government has faced challenges in effectively utilizing funds for development projects, although there has been a slight improvement in revenue collection during the first five months of the current fiscal year.
Data from the Financial Comptroller General Office (FCGO) reveals that the government missed its revenue collection target between mid-July and mid-December this year. It managed to collect Rs 399.59 billion during this period, which is 28.15% of its annual target of Rs 1.419 trillion.
The monthly revenue target was set at approximately Rs 118.25 billion, leaving a shortfall of around Rs 200 billion in the first five months. This gap will need to be addressed in the remaining months to achieve the annual target.
However, the revenue collected during this period marked a 10% increase (Rs 36.17 billion) compared to the same timeframe last fiscal year. During the first five months of the previous fiscal year, the government collected Rs 363.42 billion against an annual target of Rs 1.422 trillion.
In contrast, the government’s performance in capital expenditure has been dismal. By mid-December, only 11.58% of the allocated Rs 352.35 billion for development projects in FY 2024/25 had been utilized, according to FCGO data.
Meanwhile, the government spent Rs 151.76 billion on debt servicing, which includes interest payments and principal repayments—almost four times the Rs 40.80 billion spent on capital projects.
Capital expenditure is vital for developing economies like Nepal, where inadequate infrastructure hampers growth in both public and private sectors. Economists warn that sluggish capital spending disrupts cash flow, limiting job creation and hindering economic growth.
The government also aimed to secure Rs 52.32 billion in foreign grants this fiscal year, but no funds had been received under this heading as of mid-December. Slower revenue collection and a decline in grant receipts have increased the government’s reliance on domestic and external borrowing to finance its expenditures.
