Government Struggles to Meet Revenue Targets as Third Quarter Draws to a Close Amid Economic Slowdown

As the third quarter of the fiscal year 2023/24 nears its conclusion, the Government finds itself facing a significant shortfall in revenue collection. According to the Financial Comptroller General Office (FCGO), only Rs 720.67 billion has been amassed as of Wednesday, representing merely 50.66 percent of the projected revenue target of Rs 1.422 trillion for the fiscal year.

The challenges in revenue collection stem from a confluence of factors, including a deceleration in economic activities, governmental inefficiencies in capital expenditure, and sluggish lending by financial institutions. Despite the government's attempts to revise revenue targets downward through the mid-term review, it remains improbable that even the adjusted goal of Rs 1.309 trillion will be met.

Initially setting an ambitious target of Rs 1.422 trillion in the annual budget, the Government subsequently adjusted this figure in response to sluggish revenue accrual. However, the records maintained by FCGO reveal a marginal increase of merely nine percent compared to the previous fiscal year's revenue collection.

Tax revenue, a critical component of the government's fiscal intake, stands at a disappointing 49.85 percent of the targeted Rs 1.305 trillion. Similarly, non-tax revenue and grants also fall well short of expectations, with collections amounting to only Rs 69.85 billion against a target of Rs 117.06 billion, and Rs 2.75 billion received compared to an anticipated Rs 49.94 billion, respectively.

Despite assurances from the new government alliance to bolster revenue mobilization through effective measures, tangible progress has yet to materialize. In the month following Finance Minister Barshaman Pun's assumption of office, revenue collection amounted to a modest Rs 101.22 billion.

Moreover, as the third quarter draws to a close, capital expenditure remains notably underutilized, with only 31.4 percent of the earmarked Rs 302.07 billion allocated for development projects expended. Out of the total expenditure of Rs 901.21 billion incurred during the review period, a significant portion was dedicated to recurrent expenses (Rs 640.67 billion) and financial management (Rs 165.67 billion), primarily directed towards servicing public debt obligations.