Capital expenditure up, revenue growth down

KATHMANDU, MAY 13 - The government’s capital expenditure increased by Rs 6.55 billion in the ninth month (mid-March to mid-April) of the fiscal year to reach Rs 22.94 billion. The figure was at Rs 16.39 billion at the end of the eighth month.

Usually, capital expenditure increases in the last trimester that starts from mid-April.

However, the government’s revenue collection growth declined in first nine months. The revenue mobilisation grew 19.9 percent to reach Rs 252.41 billion as of the ninth month, according to Nepal Rastra Bank’s (NRB) latest macroeconomic report. The growth rate was 22.3 percent in the same period a year ago.

The decline in the overall revenue growth has been attributed to slow customs revenue and income tax collection. Customs revenue growth slowed to 18.5 percent against 38.9 percent of the last fiscal. The government collected Rs 49.37 billion in customs revenue. Income tax collection rose 12.3 percent, aga-inst last year’s 31.1 percent.

Value added tax (VAT) collection, however, posted a 19.6 percent growth to Rs 72.54 billion. The report attributed the rise in VAT collection to reforms in VAT administration, including control of leakages. There has also been an impressive growth in non-tax revenues, which surged by 38.8 percent to reach Rs 33.07 billion. In the same period last fiscal, non-tax revenues had declined 5.7 percent. The rise in non-tax revenue growth was due to dividends paid by public enterprises, other administrative fees and charges on passport issuance, according to the NRB.

The report showed the trade deficit continued to widen. As of the ninth month, trade deficit reached Rs 454.06 billion, up 29.1 percent. Trade deficit with India increased 30.4 percent, while that with other countries rose 26.6 percent. Exports rose 19.2 percent to Rs 68.12 billion over the review period. The growth rate was just 3.5 percent in the last fiscal year. Merchandise imports surged 27.7 percent to Rs 522.19 billion.

The balance of payment (BOP) recorded a surplus of Rs 106.23 billion, compared to Rs 30.77 billion in the same period a year ago. The current account surplus stood at Rs 68.77 billion, against last year’s Rs. 22.24 billion.

The rise in the current account surplus was primarily due to a substantial rise in net services, net income, grants as well as a high growth of workers’ remittances, states the NRB report. Inflation is once again threatening to touch double digits, with the consumer price index reaching 9.4 percent as of the ninth month.