Nepal Rasta Bank’s FY24 Monetary Policy to Support Recovery

For the fiscal year starting mid-July 2023, the Nepalese government has adopted a prudent fiscal policy focusing on
the rationalization of expenditure and increasing domestic revenue mobilization. The government announced an annual expenditure plan worth NPR 1.75 trillion for FY24. The expenditure estimated is 2.4% lower than the allocation for FY23, and over 16% higher than the revised estimate of NPR 1.5 trillion. Of the total allocation, NPR 1.14 trillion (65%) is assigned to current expenditure, NPR 302 billion (17%) to capital expenditure, and NPR 308 billion (18%) to financing. Meanwhile, the government expects its initiatives to increase the use of digital technology in revenue administration, control revenue leakages, broaden tax base and update tax rates for certain goods, to help achieve targeted revenue of NPR 1.3 trillion in FY24. This compares to the revenue target of NPR 1.1 trillion in FY23.
Consequently, the fiscal deficit is projected to decline in FY24 resulting from the estimation of improved performance in revenue mobilization and various policy measures adopted in the budget for rationalization of recurrent expenses. On the borrowing front, gross domestic borrowing is targeted at NPR 240 billion in FY24, lower than the estimated target of NPR 256 billion in FY23. Overall, the government expects fiscal policy to help achieve GDP growth of 6% in FY24, from an estimated 2.2% in FY23.

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