"Economy is gaining momentum with uptick in both internal and external indicators"

KATHMANDU, APRIL 27: The Ministry of Finance has concluded that the country's overall economy has gained momentum. According to the Economic Bulletin published by the Ministry of Finance, "External indicators of the economy are strong and robust, while internal indicators are showing improvement. Overall, the economy has gained momentum." The bulletin mentions increases in revenue mobilization, capital expenditure, expansion of the tax base, foreign aid commitment, NEPSE index, exports, and imports.

According to the Ministry of Finance, public finance indicators remain positive. In the first eight months of the current fiscal year, the federal government's revenue mobilization increased by 12.7 percent, and the total expenditure by 4.94 percent. 

The federal government's total revenue reached NPR 720.35 billion, marking a 12.7 percent increase compared to the NPR 639.05 billion collected during the same period last fiscal year. The share rates of tax revenue and non-tax revenue in the total revenue were 88.7 percent and 11.3 percent, respectively. During the review period, total receipts, including other income, amounted to NPR 729.66 billion.

The revenue, which had grown at a high rate until mid-March of 2023/24, decreased by 14.9 percent during the same period of the current fiscal. Subsequently, there has been a gradual improvement in revenue growth, reaching 12.7 percent in the first eight months of the current fiscal year, according to the Ministry of Finance.

Until mid-March of 2024/25, the federal government's total expenditure reached NPR 841.15 billion, a 4.94 per cent increase compared to the NPR 801.58 billion spent during the same period last fiscal year. During the review period, there has been a marginal increase in recurrent expenditure, a slight increase in capital expenditure, and a high increase in financial management expenditure.

Out of the total expenditure, recurrent expenditure accounts for 69.6 percent, capital expenditure for 9.8 percent, and financial management for 20.6 percent. During the same period last fiscal year, these figures were 72.6 percent, 10.1 percent, and 17.2 percent, respectively. The current fiscal year has seen increases of 0.6 percent in recurrent expenditure, 1.7 percent in capital expenditure, and 25.1 percent in financial management expenditure.

The tax base has expanded with an increase in the number of taxpayers obtaining Permanent Account Numbers (PAN) for individuals and businesses. Until mid-March of the fiscal year 2023/24, 494,863 new PAN holders were added. In the same period of the current fiscal year, a total of 511,239 new taxpayers were added, bringing the total number to 6,737,372.

During this period, the ratio of business PAN, PAN obtained by tax-deducting entities, and individual PAN among the total registered PAN is 30.1 percent, 0.5 percent, and 69.4 percent, respectively. As of this period, the number of taxpayers registered for Value Added Tax (VAT) has reached 343,771, and the number of taxpayers registered for Excise Duty has reached 123,672.

Until mid-March of the current fiscal year, foreign aid commitment has significantly increased to NPR 221.99 billion and 87 million, compared to the same period last fiscal year. Grants constitute 25.7 percent of the total aid commitment, while loans account for 74.3 percent. During the same period last fiscal year, the total foreign aid commitment was NPR 101.19 billion and 61 million.

Among the total aid commitment, the energy sector received the highest amount at 25.4 percent, while the good governance sector received the lowest at 0.2 percent. The annual point-to-point consumer price inflation stands at 3.75 percent. Inflation has decreased in both the food and beverage groups.

During the review period this fiscal, the annual point-to-point consumer price inflation was 3.75 percent, compared to 4.16 percent in the same period last year. The inflation in the food and beverage group was 3.34 percent, while the same in the non-food and service group was 3.97 percent. Last year, the inflation rates in these groups were 4.95 percent and 3.74 percent, respectively.

The average inflation in the first eight months of the current fiscal year is 4.72 percent, which is within the annual target range. Broad money supply has increased by 4.8 percent, compared to a 7.7 percent increase during the same period last year. On an annual point-to-point basis, broad money supply increased by 9.9 percent.

The total imports of goods increased by 11.2 percent, and exports by 57.2 percent itll mid-March this year. Due to the small size of the export trade, the trade deficit increased by 6.2 percent.

Additionally, remittance inflow has increased by 9.4 percent, and while the tourist arrivals rose by 1.9 percent during the review period this fiscal.