Development spending lags behind as current fiscal nears end

KATHMANDU, APRIL 29: With just two and a half months remaining in the current fiscal year, the capital expenditure continues to lag significantly behind target, indicating a sluggish pace in development activities. According to official data, less than one-third of the allocated capital budget has been spent in the first nine and a half months of 2024/25.

As per the Office of the Auditor General, only 30.93 per cent of the capital budget had been mobilised during the review period. Out of the Rs 352.35 billion allocated for capital expenditure for the fiscal year, only Rs 108.99 billion has been spent so far.

While the capital expenditure remains notably low, the government has been relatively more active in recurrent spending. By Baishakh 15 (27 April 2025) of this fiscal, 62.71 per cent of the allocated recurrent budget had been spent. Out of the Rs 1.14 trillion allocated for recurrent expenditure, the government had already spent Rs 715.36 billion, according to the Office.

The underperformance is not limited to the development spending alone. The overall budget implementation appears weak, and the government is falling short of its revenue collection targets as well. Against an annual revenue target of Rs 1.419 trillion, the government has managed to collect only Rs 865 billion during the review period—just 60.99 per cent of the target. With revenue falling short even to cover recurrent expenditures, the Ministry of Finance is under increasing pressure, which, in turn, is affecting the overall government spending.

In the first nine and a half months of this fiscal year, the government's expenditure had exceeded its revenue by Rs 161.47 billion. The government spent Rs 1.052 trillion, while the total revenue stood at Rs 890.65 billion during the same period. The government income has been just enough to meet recurrent expenses, resulting in a widening fiscal gap of over Rs 161 billion. The total budget announced for the fiscal year was Rs 1.8603 trillion.

Revised budget targets at risk

During the mid-year budget review, Deputy Prime Minister and Finance Minister Bishnu Poudel had reduced the overall size of the national budget by nearly Rs 175 billion, lowering the total allocation to Rs 1.6927 trillion, 90.99 per cent of the initially announced budget.

The recurrent expenditure was revised to Rs 1.029 trillion (90.24 percent of the original allocation), and the capital expenditure was adjusted to Rs 299.5 billion (85 percent of the initial target). Originally, the previous government had allocated Rs 1.1406 trillion for recurrent expenses and Rs 352.36 billion for capital spending.

Likewise, the allocation for financial management was also revised to Rs 363.93 billion, which is 99.09 percent of the original Rs 367.28 billion set aside under this heading.

The government now estimates total spending by the end of the fiscal year to reach Rs 1.475 trillion. This includes revised projections of Rs 36.62 billion in foreign grants and Rs 180.83 billion in foreign loans. The government plans to mobilise resources totalling Rs 1.5903 trillion from revenue and domestic borrowing, Rs 52.32 billion from foreign grants, and Rs 217.67 billion from foreign loans to meet its financing needs.