Kathmandu, March 5

The government has revised downwards the capital budget for the current fiscal year by 15.5 per cent due to its failure to ramp up spending capacity.

The government had allocated Rs 313.9 billion for capital budget when the budget was presented in the Parliament on May 29 last year. But till the first half of the current fiscal year, the government has been able to spend a mere Rs 55 billion, or 17.7 per cent of the total capital budget allocation, due to lack of absorptive capacity. Considering the slow spending, the capital budget has now been revised downwards to Rs 265.2 billion.

Unveiling the mid-term review report of the budget for fiscal year 2018-19 today, the Ministry of Finance has also revised down the budget on recurrent expenditure by 5.57 per cent to Rs 798.4 billion. The recurrent expenditure is primarily the spending of the government on non-capital formation programmes such as salaries of the government staffers, social security and other expenses. The 2018-19 budget had allocated Rs 845.5 billion for recurrent expenditures.

Similarly, the government has also revised down the budget on financing by 13 per cent to Rs 135.4 billion for the current fiscal year, against Rs 155.7 billion allocated under this heading by the budget for fiscal 2018-19.

Along with this revision in the capital, recurrent and financing budget, the size of the budget for the ongoing fiscal year has also contracted by 9.16 per cent to Rs 1.19 trillion. Initially, the size of the budget for fiscal 2018-19 was Rs 1.31 trillion. Finance Secretary Rajan Khanal, claimed that economic indicators in the first half of the current fiscal year are positive owing to the rise in agriculture production, expansion of industrial

capacity, rise in the arrival of foreign tourists, improvement in electricity supply, increased capital expenditure and rise in revenue collection, among others.

Addressing the press conference, Finance Minister Yubaraj Khatiwada, said that Nepal will achieve an economic growth rate that is close to the eight per cent growth target of the government in the current fiscal year.

“As various economic indicators are positive, we can achieve economic growth rate that is close to the target. However, we need to improve the spending capacity of all line ministries to ensure that we achieve the set economic targets for the ongoing fiscal year,” said Khatiwada.