Revenue Target Rises, Tax Burden Intensifies

The Government of Nepal has outlined three primary sources to finance the proposed NPR 1.964 trillion budget for the upcoming fiscal year 2082/83: domestic revenue, internal and external loans, and foreign grants.

The government plans to raise NPR 1.315 trillion through domestic revenue. However, according to current estimates, only NPR 1.260 trillion is firmly assured. This shortfall mirrors last year’s scenario, where the revenue target also fell short. The gap suggests persistent challenges in revenue mobilization, which could affect budget execution.

For internal and external borrowing, the government aims to collect NPR 595 billion, but so far, only NPR 547 billion is secured. Compared to the previous year, this reflects only a slight increase and still makes up nearly 30% of the total budget. This indicates a continued reliance on debt to bridge the fiscal gap, raising concerns about long-term debt sustainability.

Regarding foreign grants, the government has projected NPR 53 billion in aid. However, only NPR 52 billion has been confirmed. This figure remains similar to previous years, reflecting limited growth in external grant commitments. The timely disbursement of these grants is also often uncertain, which may add to implementation delays.

In summary, the government’s plan to finance the majority of its budget through revenue and borrowing reveals an underlying fiscal strain. The mismatch between projected and secured funds, especially in revenue and loans, poses a risk to full budget execution. To ensure successful implementation, Nepal will need to strengthen its revenue administration, improve expenditure efficiency, and enhance transparency in debt and aid utilization.