Despite revising its revenue collection target through the mid-term review, the government has still fallen short, collecting less than 50 percent of the targeted annual revenue.
According to records from the Financial Comptroller General Office (FCGO), the government collected Rs 642.85 billion during the review period, while the revised target stands at Rs 1.286 trillion. Initially, the government had set the revenue collection goal at Rs 1.419 trillion, but due to slow revenue growth, it was later reduced by Rs 133 billion. As a result, revenue collection in the first seven months of FY 2024/25 amounted to just 45.29 percent of the original target.
The shortfall is even more pronounced when compared to the target for the first six months. By mid-January, the government aimed to collect Rs 672.80 billion, yet the actual collection by mid-February remained below this figure.
In its mid-term review, the Ministry of Finance (MoF) attributed the revenue shortfall to an ongoing economic slowdown and a decline in imports of key goods. Customs revenue saw a sharp drop due to reduced imports of diesel, footwear, iron, tiles, tobacco, MS billet, small cardamom, fruits, aluminum wire, crude edible oils, and wine, among others. The MoF also acknowledged that ineffective market monitoring and unchecked cross-border smuggling have further hampered revenue collection. Additionally, expanded tax subsidies on various goods have negatively impacted revenue generation.
Meanwhile, capital expenditure has also been significantly underutilized. The government spent only 19.42 percent of the allocated capital budget in the first seven months, utilizing just Rs 68.41 billion of the earmarked Rs 352.35 billion for development projects. Even after the mid-term review reduced the capital expenditure target by Rs 52.85 billion to Rs 299.50 billion, only 22.84 percent of the revised amount has been spent.
The continued shortfall in both revenue collection and capital expenditure raises concerns about the government’s ability to meet its fiscal targets and sustain economic growth.
