Revenue collection improved markedly during the sixth month of the fiscal year as imports entered the country through alternate routes, although the overall collection during the first half remained near historic lows, the Finance Ministry said.

During the one-month period from mid-December 2015 to mid-January 2016, revenues almost equalled the target for the period as most of the shipments were rerouted through border points with lax controls while the main entry point Birgunj remained firmly shut.

The government collected Rs52 billion in revenue compared to the target of Rs54 billion for the month-long period.

As per the information made public by the ministry, the collection of customs duty, excise duty, health service tax, education service tax, registration fee and vehicle tax surpassed the target. The collection of value added tax (VAT), income tax and non-tax charges was also impressive compared to the previous months but fell short of the goal.

However, revenue collection during the first half of the current fiscal year missed the target by Rs52 billion as the trade embargo by India, which began on September 22 or two days after the promulgation of Nepal’s new Constitution, brought cargo movement across the border to a near halt.  

According to the Finance Ministry, revenue collection stood at Rs164.33 billion during the first six months of the fiscal year against the target of Rs216.59 billion.

The blockade has been eased at most border crossing points; but Birgunj Customs, the main transit point which handles more than 60 percent of the goods entering Nepal, remains closed. Officials said that this had an impact on revenue collection because the situation has not returned to normal.

Meanwhile, government expenditure remained weak with capital budget spending during the period amounting to Rs13.63 billion compared to the annual target of Rs208 billion. Under the financing heading, spending reached Rs19.76 billion against the annual allocation of Rs126 billion. Under the recurrent heading, expenditure amounted to Rs126 billion against the annual allocation of Rs484 billion.