Capital spending less than 47%, revenue mobilisation improves

Kathmandu, July 18: The government's capital expenditure remained poor in the fiscal year 2025/26, with less than half of the allocated development budget utilised despite a modest improvement in revenue mobilisation.

According to the Financial Comptroller General Office (FCGO) under the Ministry of Finance, the government spent only Rs. 190.84 billion, or 46.79 per cent, of the Rs. 407.88 billion allocated for capital expenditure by the end of the fiscal year on July 16.

The performance marks a sharp decline from the previous fiscal year 2024/25, when the government utilised Rs. 222.68 billion, or 63.2 per cent, of the Rs. 352.35 billion capital budget. 

Capital expenditure stood at 63.47 per cent in 2023/24; 61.44 per cent in 2022/23; 57.23 per cent in 2021/22 and 64.69 per cent in 2020/21.

Despite repeated commitments to improve budget expenditure and accelerate development works, capital spending has continued to lag.

The Ministry of Finance, in its mid-term budget review, attributed the low capital expenditure to inadequate project preparation, delays in land acquisition and forest clearance, and damage to physical infrastructure caused by the Gen Z movement.

The review had revised the capital expenditure estimate downward to Rs. 243.30 billion, but actual spending reached only around 78 per cent of the revised target. The then Finance Minister Rameshore Prasad Khanal also revised the total expenditure estimate for the fiscal year to Rs. 1,688.32 billion, about Rs. 275 billion lower than the original budget of Rs. 1,964.11 billion.

The mid-term review also lowered recurrent expenditure from Rs. 1,180.98 billion to Rs. 1,125.97 billion and reduced financial management expenditure from Rs. 375.24 billion to Rs. 319.04 billion.

The government's budget deficit widened to Rs. 301.51 billion in the last fiscal year as expenditure outpaced total receipts.

According to the FCGO, the government recorded total receipts of Rs. 1,280.65 billion, achieving 83.51 per cent of the annual target of Rs. 1,533.44 billion. Meanwhile, total government expenditure reached Rs. 1,582.16 billion, equivalent to 80.55 per cent of the total budget allocation of Rs. 1,964.11 billion.

Under recurrent expenditure, the government spent Rs. 1,043.99 billion, or 88.4 per cent of the allocated Rs. 1,180.98 billion. 

Spending under the financing heading stood at Rs. 347.33 billion, accounting for 92.56 per cent of the allocated Rs. 375.24 billion. Although revenue collection fell short of the annual target, it recorded moderate year-on-year growth.

The government collected Rs. 1,241.31 billion in revenue during fiscal year 2025/26, equivalent to 83.87 per cent of the annual target of Rs. 1480 billion.

Tax revenue amounted to Rs. 1,121.08 billion, or 84.57 per cent of the target, while non-tax revenue stood at Rs. 120.23 billion, or 77.87 per cent of the target.

The government had aimed to collect Rs. 1,325.58 billion in tax revenue and Rs. 154.41 billion in non-tax revenue during the fiscal year. During the last fiscal year, only Rs. 31.26 billion grant was received by the government. It is 58.5 per cent of the annual target of the government. 

The government had set an annual target of receiving Rs. 53.44 billion grant in the fiscal year that ended on Thursday. 

However, the government received Rs. 8.07 billion under other receipts in the last fiscal year.  Despite missing the target, revenue collection increased by about 5 per cent compared to the previous fiscal year. Revenue mobilisation increased by Rs. 62.43 billion in the last fiscal year compared to the previous fiscal year. The government collected revenue of Rs. 1,178.82 billion during the fiscal year 2025/26. It was only 83.06 per cent of the annual target of Rs. 1,419.30 billion.

During the mid-term review, the government revised the revenue collection and miscellaneous receipts target downward to Rs. 1,298 billion for the fiscal year 2025/26.