Kathmandu, January 3
The federal government is under pressure to find resources for recurrent expenditure, as the gap between revenue collection and government expenses has been widening.
The Ministry of Finance today said the gap between the government’s expenditure and revenue collection was Rs 95 billion in the first five-and-a-half months of this fiscal.
The government opted for domestic debt to collect funds for recurrent expenditure — grants to local bodies and administrative expenses, as revenue could not fulfil the requirement since the federal government was obliged to transfer grants to local units.
The government transferred two tranches of grants worth Rs 75 billion each in mid-July and mid-November. After transfer of funds worth Rs 150 billion, the federal government is under pressure to manage resources for expenses of programmes that are allocated in the budget.
The grants that are transferred to the local units will remain in the reserve fund of local units if not spent and will not be frozen at the fiscal end like in the previous years. The federal government needs to transfer the remaining Rs 75 billion out of the Rs 225 billion grant to the local units by mid-March.
Besides, a total of Rs 7 billion needs to be transferred to the seven provinces for provincial governments to set up their offices, according to Finance Secretary Shankar Prasad Adhikari.
Officials of the Financial Comptroller General Office have said that the federal government was under pressure to release payments to contractors and schedule of releasing payments has been deferred due to slowdown in revenue collection. According to FCGO, the government has collected only 37 per cent, or Rs 272.62 billion, of the annual target of revenue even as the first half of the fiscal approaches.
Meanwhile, the government has raised Rs 110 billion in domestic debt, which is nearly 76 per cent of the total target. The central bank has planned to raise 82 per cent of domestic debt by the first half of the fiscal.
The government is not running out of funds, but it has to stick to the budget to manage resources. As resources are parked in coffers of local governments, the federal government is under pressure to manage available resources.
Local bodies have to follow set guidelines while spending funds transferred to them. They have also been pressuring the federal government, stating that they lack funds for constructing office buildings and purchasing vehicles.
The government finances the budget from the revenue it collects, by raising domestic debt, through foreign aid and cash surplus of the previous fiscal. Normally, in foreign-aid funded projects, development partners disburse funds once the government completes work as agreed, except in turnkey-projects and for budgetary support.
A high-level official at the Ministry of Finance said the federal government was facing challenges in managing resources to match funds of foreign aid funded projects.
A version of this article appears in print on January 04, 2018 of The Himalayan Times.