MoF reports huge gap in revenue forecast and actual realization as country’s key fiscal risk
Summary
The Ministry of Finance reports a significant gap between revenue forecasts and actual collection, posing a key fiscal risk for Nepal and forcing expenditure cuts that impact economic growth.
Key Points
- The Ministry of Finance acknowledges a large discrepancy between forecasted and actual revenue collection, threatening fiscal stability.
- Tax revenue forecasts deviate by an average of Rs 550 billion annually, about 7.2% of GDP, comparable to COVID-19 period volatility.
- Overly optimistic assumptions, particularly on customs duties and import-based VAT, contribute to the revenue forecasting gap.
- Mid-year expenditure cuts due to revenue shortfalls reduce budget for development projects and impact economic growth targets.
