Chandan Sapkota’s Blog: 09/01/2019

Within recurrent expenses, payment of employees increased by 27.6% as a result of the hike in public areas sector employees’ wages by 18% and yet another allowance of NRs1,000. 72.7% (Figure 10). Overall, repeated expenditures are estimated to be 16.4% of GDP, greater than 14.6% of GDP in FY2013. Within capital expenditures, land purchase declined by 48.2%, faster than the speed of decline in FY2013. The down sides are indicated by it surrounding land acquisition for infrastructure projects.

Spending on building building, plant and machinery, and research and consultancy grew by over 20%. Vehicle purchase grew by a whopping 248.7%, which could be related to the low foundation effect partly. The costs for civil works increased by 11 just.2%, reflecting procurement and authorization-related delays. As in the previous years, FY2014 saw bunching of spending, especially capital spending, towards the previous few months.

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Almost one-fourth of actual total public expenses was done in the last month and 42.4% in the last three months. Of the real capital spending, 37.8% was spent within the last month and 58.8% in the last three months (Figure 13). This pattern of spending is very little different from prior years, regardless of the timeliness of issuance of budget. It increases concerns about not only the absorptive capacity, however the structural issues concerning budget execution as layed out above also. The ballooning recurrent expenditure is a matter of concern as it remained about NRs4 billion greater than tax income in FY2014.

Furthermore, the development rate of repeated costs has been greater than the development rate of taxes revenue in the last 3 years. Rationalization of recurrent expenses- a substantial part of these go to public sector salary, and pension and public security related obligations-is required for creating the fiscal space had a need to improve allocations for capital costs. Although capital spending allocation can be improved through increased home/international borrowing in the short to medium-term, in the long-term building up income mobilization and repeated expenses rationalization will be needed to reduce the reliance on increased borrowing. II. Revenue Performance Total revenue grew by 20.6%, lower than its 21 marginally.2% growth in FY2013, reaching NRs356.8 billion (18.5% of GDP).

It is higher than the budget target of NRs354.5 billion, because of the significant upsurge in non-tax revenue, which partly offset the lower-tax income growth. While non-tax revenue grew by 23.8% instead of a decrease by 2.7% in FY2013, tax revenue growth slowed up to 20.1% from 25.8% in FY2013. Any Branch BANK OPERATING SYSTEM (ABBS) for large taxes payers.

Revenue mobilization from all sources, except vehicle tax, grew in FY2014. The development rate of value added tax (VAT), excise responsibility, land registration fee, and non-tax income were greater than in FY2013. They increased by 20.9%, 23.8%, 32.5%, and 23.8%, respectively. 0.1% of GDP in FY2014 (Figure 17). Though this is preferable to the fiscal surplus equivalent to 0.7% of GDP in FY2013, it is lower than the medium-term average fiscal deficit around 2 still.2% of GDP.

For a low-income country with a large financing need to bridge the infrastructure deficit, in hydropower and transport particularly, running a humble fiscal deficit without jeopardizing fiscal sustainability is appealing. Nepal faces around infrastructure financing difference of between 8-12% of GDP until 2020. The full total online borrowing amounted to NRs26.6 billion in FY2014 (1.4% of GDP). V. Public Enterprises The entire performance of public businesses (PEs) improved in FY2013 as a result of the lower than expected losses of Nepal Oil Corporation (NOC) and Nepal Electricity Authority (NEA).

Of the 37 PEs, 17 made one and loss didn’t make any purchase. 4 PEs that incurred losses in FY2012 earned profits in FY2013. Compared to a net lack of NRs 3.5 billion in FY2012 (0.23% of GDP), FY2013 saw an astonishing rebound with an estimated net income of NRs 11.4 billion (0.7% of GDP).