The Government of Nepal has missed its revenue collection target for the first five months of the current fiscal year, citing the economic disruption caused by recent protests and lagging public investment.
Target vs. Reality
Against a target of Rs 520.44 billion for the mid-July to mid-December period, the Ministry of Finance (MoF) collected only Rs 409.78 billion, achieving 78.74% of its goal. This represents 27.45% of the full fiscal year’s total revenue projection of Rs 1.480 trillion.
Primary Causes
- Political Unrest: Officials attribute the shortfall primarily to the economic slowdown triggered by the Gen Z movement in September. The resulting security concerns and disruptions significantly dampened business activity.
- Tax Collection Impact: Income tax collection was notably affected, falling Rs 25 billion short of its Rs 86 billion target, with only Rs 61 billion realized.
- Low Capital Expenditure: A senior MoF official cited the government’s “lackluster capital expenditure” as a key factor, noting that higher public investment would have stimulated economic activity and boosted revenue. Data shows only 8% (Rs 33.87 billion) of the allocated Rs 407.88 billion for development projects has been spent so far this fiscal year.
Mixed Revenue Trends
While overall collections were weak, import-based revenues saw an increase. An approximate 18% rise in imports led to higher collections from customs duties, excise duties, and VAT at border points. However, this growth was offset by underperformance in non-tax and direct tax (income tax) revenues.
Recent Performance
Revenue collection showed slight improvement in the last month of the review period (mid-November to mid-December), meeting 84.31% of its monthly target by collecting Rs 80.27 billion against a goal of Rs 95.20 billion.
