NEPSE trading

public finance
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By Sandeep Chaudhary

Public Finance Trends Show Fiscal Recovery with Moderate Revenue Growth

Public Finance Trends Show Fiscal Recovery with Moderate Revenue Growth

Nepal’s public finance data over recent fiscal years paints a dynamic picture of the government's revenue and expenditure trends, reflecting both periods of economic expansion and cautious fiscal management. According to the data, revenue growth witnessed significant fluctuations, ranging from a high of 16.0% in one fiscal year to a notable contraction of -9.3% during a subsequent period. However, the most recent data signals a consistent recovery, with revenue growth climbing from 7.1% to 9.8%, and then to 10.5%. This rebound indicates improved tax administration, increased economic activity, and possibly enhanced compliance efforts following previous declines.

On the expenditure side, the government has exhibited measured fiscal discipline. While expenditure growth reached as high as 9.7% and 9.5% in earlier years, it experienced a sharp slowdown, including a contraction of -0.9%. The most recent fiscal periods show a gradual uptick in expenditure, growing by just 0.4% initially and then accelerating to 8.6%. This suggests a renewed focus on development spending and economic stimulus, potentially in response to post-COVID recovery efforts or pre-budget capital mobilization.

The contrasting trends between revenue and expenditure growth over the observed periods highlight Nepal’s ongoing efforts to balance fiscal sustainability with economic stimulus. Notably, the phase when revenue shrank by 9.3% while expenditure still grew by 8.5% could have contributed to fiscal stress, likely increasing the budget deficit. However, the more recent parallel growth in both revenue and expenditure reflects a healthier and more stable fiscal trajectory.

In summary, the public finance data reveals a promising outlook for Nepal’s fiscal health, with consistent revenue recovery and prudent expenditure practices supporting macroeconomic stability. Continued efforts in revenue mobilization and efficient public spending will be critical to sustaining this momentum.

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