Government hopeful of achieving growth rate of above 7 percentThe government is hopeful of achieving an economic growth rate of 7-8 percent despite a slowdown in capital expenditure.
The government is hopeful of achieving an economic growth rate of 7-8 percent despite a slowdown in capital expenditure. Finance Minister Yuba Raj Khatiwada had forecasted a growth rate of 8 percent when he presented the budget statement for the current fiscal year to Parliament.
Addressing a programme organised by the Finance Ministry to publish the findings of the mid-term review of the annual budget on Tuesday, Khatiwada said the government was still on track to achieve the economic growth predicted for this fiscal year despite the capital spending falling way below target.
“I will not be obstinate and say that we will achieve the economic growth of 8 percent during this fiscal year, but we will achieve a growth rate somewhere between 7 and 8 percent,” said Khatiwada.
However, the statistics revealed by the ministry don’t support Khatiwada’s statement. The government was able to spend only 28.6 percent of the total budget allocated for the current fiscal year during the first six months. Expenditure in the first half reached Rs375.82 billion out of the Rs1,315.16 billion budget for this year.
Although recurrent expenditure is somewhat satisfactory at 35.1 percent of the total allocation, capital spending is dismal like it was in previous years. Capital expenditure during the first six months of the fiscal year was Rs55.52 billion, or only 17.7 percent of the Rs313.99 billion allocated for the fiscal year.
The government was successful on the revenue collection front by collecting Rs402.45 billion in the first six months of the fiscal year.
Owing to the slow spending and low absorptive capacity, the Finance Ministry has revised the budget estimate for the current fiscal year. Khatiwada said only Rs1,199.15 billion, or 91.2 percent of the total allocation, was likely to be spent by the end of the fiscal year.
The government has projected capital spending to reach 84.5 percent of the allocation at the end of the fiscal year. It has earmarked Rs313.99 billion for capital spending. But actual spending till the end of the fiscal year is likely to stand at Rs265.26 billion, according to the Finance Ministry.
If there is adequate spending by the private sector, the country can achieve the economic growth forecasted earlier even with the revised expenditure, according to Khatiwada. “Despite the low capital spending by the government, we will be able to achieve the growth target if there is enough liquidity with banks and financial institutions and credit is mobilised to the productive sector,” said Khatiwada.
Remittance inflow grew 30.2 percent, Rs443.36 billion
Inflation below 5 percent
Revenue collection up 26.1 percent
Overall budget spending poor, only 28.6 percent spent
Capital budget disappointing, 17.7 percent spent so far
Spending on National Pride Projects stood at Rs22.08 billion (24.9 percent)
Rising trade deficit (up 19.9 percent)
BoP deficit Rs63.68 billion