Kathmandu- The government has revised the targets set in the fiscal year 2024/25 budget, reducing overall expenditure and revenue projections. While former Finance Minister Barshaman Pun had presented a budget of Rs 1.86 trillion, current Finance Minister Bishnu Prasad Paudel has trimmed down all major budgetary targets.
Presenting the mid-year budget review report in parliament, Finance Minister Paudel stated that global economic tensions and a contraction in credit expansion have made achieving the targeted economic growth rate challenging. Although the government may fall short of the 6 percent economic growth target, Paudel expressed optimism that ongoing reform measures would help bring the economy closer to the goal.
As per the revised estimates, total expenditure for the fiscal year is expected to be Rs 1.692 trillion, which is 90.99 percent of the initial budget target. The government had initially allocated Rs 1.14 trillion for recurrent expenditure, but this has now been revised down to Rs 1.029 trillion, or 90.24 percent of the target. Similarly, the capital expenditure target has been reduced to Rs 299 billion, with an estimated spending of 85 percent. Financial management expenditure, however, has been revised upward, from Rs 352 billion to Rs 363 billion, bringing it to 99.09 percent of the initial estimate.
On the revenue side, the government had originally aimed to collect Rs 1.419 trillion, including grants, but the mid-year review has lowered this target to Rs 1.286 trillion. To manage the budget deficit, the government plans to mobilize Rs 330 billion in domestic loans and Rs 168 billion in external loans.
Finance Minister Paudel criticized the previous administration, arguing that the budget was not formulated on sound fiscal principles and had become a burden on the government. Responding to opposition criticism, he remarked that they should appreciate the fact that the government had avoided introducing a supplementary budget. He also accused former Finance Minister Barshaman Pun of ignoring a Cabinet decision that restricted projects below Rs 30 million from being included in the budget, instead incorporating plans worth as little as Rs 75,000.
Furthermore, he alleged that the Pushpa Kamal Dahal 'Prachanda'-led government had acted irresponsibly by adding 11,000 new projects without ensuring funding sources, calling it a reckless and unsustainable approach.
Despite the budget cuts, Finance Minister Paudel highlighted some positive economic indicators. He stated that paddy production is expected to increase by 4.4 percent this fiscal year. Additionally, falling crude oil prices in the global market and declining interest rates are anticipated to support industrial growth. Inflation, which was initially targeted at 5.5 percent, stood at 4.97 percent during the review period. He also noted that the banking system has seen a liquidity injection of Rs 265 billion, which has helped ease financial constraints.
