KATHMANDU, NOVEMBER 16
Nepal's fiscal and monetary indicators showed mixed momentum in the first quarter of FY 2025/26, with government spending outpacing revenue mobilisation and money supply expanding at a modest pace, according to the Current Macroeconomic and Financial Situation report released today by Nepal Rastra Bank (NRB).
According to the NRB report, government expenditure reached Rs 364.59 billion by the third month of the fiscal year, with recurrent spending alone accounting for Rs 256.81 billion. Capital expenditure remained low at Rs 19.18 billion, while financial expenditure stood at Rs 88.60 billion, underscoring the persistent structural challenge of weak capital project execution.
The report further stated that the rvenue mobilisation continued to trail spending. Total revenue, including transfers to provincial and local governments, amounted to Rs.249.05 billion, comprising Rs 234.33 billion in tax revenue and Rs 14.72 billion in non-tax revenue. The mismatch between revenue intake and expenditure widened the fiscal pressure during the review period.
The government's cash balance, held across various accounts at NRB, rose to Rs 174.92 billion in mid-October from Rs 130.73 billion in mid-July, reflecting front-loaded revenue flows and slower capital spending.
Provincial governments mobilised Rs 45.08 billion in resources during the first quarter, including Rs 35.07 billion in federal grants and transfers and Rs 9.35 billion in their own revenues. Their total expenditure, however, reached only Rs 17.15 billion, continuing the multi-year trend of large fiscal underutilisation at the subnational level.
On the monetary front, broad money (M2) grew 3.2 percent in the review period, slightly lower than the 3.4 percent expansion recorded a year earlier. On a year-on-year basis, M2 was up 12.2 percent by mid-October.
Net foreign assets (NFA), a key driver of money supply, climbed Rs 264.03 billion (9.9 percent), accelerating from the 9.3 percent rise in the same period last year, supported by strong external inflows.
Reserve money increased 2.6 percent, compared with 4.5 percent in the previous year's first quarter, though the year-on-year expansion remained robust at 14 percent.
