May 21, 2024, Tuesday
Nepal 1:37:26 pm

NPC determines budget ceiling for next three fiscal years

The Nepal Weekly
February 28, 2023

The National Planning Commission (NPC) has prepared a budget ceiling for the next fiscal year along with the medium-term expenditure framework.

The NPC has determined the national resource estimates and expenditure limits for the next three fiscal years.

According to a notice issued by the NPC, the budget for the fiscal year 2023/24 is going to be prepared within the ceiling of Rs. 1,688.4 billion.

The budget ceiling for the next fiscal year is Rs. 105.43 billion less than the budget of the current fiscal year 2022/23.

For the current fiscal year, the government had unveiled a budget of Rs. 1,793.83 billion. But in its mid-term review, the government has reduced the size of the budget by Rs. 244 billion. Compared to the initial allocation, the size of the budget has been reduced by 14 per cent to Rs. 1,549.99 billion.

The budget limit has been estimated by analysing various challenges seen in the national economy and their impacts on the economic indicators, according to NPC.

The NPC said that it has prepared and approved the guidance and framework for budget formulation-2079, including the three-year medium-term expenditure structure and the outline of the annual programme for the fiscal year 2023/24.

It said that the guidance and framework have been sent to all the constitutional bodies and ministries and the provincial governments.

According to the medium-term expenditure structure, the government revenue is estimated to increase at a rate of 14 per cent in the coming three fiscal years. The size of the budget is also estimated based on the same estimate of revenue growth, according to the NPC.

The total resources of the government for the year 2023/24 will be equal to Rs. 1,688.4 billion, Rs. 1,880.3 billion for the fiscal year 2024/25 and Rs. 2,088.9 billion for the fiscal year 2025/26, according to the preliminary estimations.

According to the NPC, allocation efficiency has been taken into account while determining the budget ceiling for the next fiscal year.

The predictability and allocation efficiency of the budget system has been considered keeping in mind the situation where more budget is demanded from the concerned ministries or agencies but not spent according to the allocation.

NPC has emphasised that it is appropriate to arrange the budget only for the programmes and activities that can be spent within the fiscal year.

8 % growth target 

While determining the national resource estimates and expenditure limits for the next three fiscal years, the NPC has set a goal of achieving an economic growth rate of 8 per cent at the end of the fiscal year 2025/26.

It is estimated that the economic growth rate of six per cent will be achieved in the fiscal year 2023/24.

Similarly, the NPC has estimated that 7.4 per cent  economic growth in the fiscal year 2024/25 and 8 per cent in the fiscal year 2025/26 will be maintained.

However, the Commission also said that the economic growth target set by the government for the current fiscal year 2022/23 will not be achieved. In the current fiscal year, the target of economic growth of 8 per cent is likely to be limited in only 4.5 per cent.

In the current fiscal year, the government had aimed to keep the consumer price inflation within the desired limit of 7 per cent. But the inflation may exceed to 7.5 per cent, according to the NPC.

Similarly, the Commission has projected inflation to be within the desired limit of 6.5 per cent in the coming year 2023/24 and 6 per cent in the following two years.

The Commission also estimates that Nepal’s per capita income will improve significantly within the next three years. According to the details of the NPC, the target of per capita income is USD 1,572 in the year 2023/24, USD 1,740 in the year 2024/25 and USD 1,935 in the year 2025/26.