Budget remains in surplus mode

In the first eight months of 2008-09, the budget remained at a surplus of Rs 11.3 billion in contrast to a deficit of Rs 7 billion in the corresponding period the last fiscal year. "An impressive growth of resource mobilisation relative to the government expenditure accounted for such a budget surplus in the review period," said Current Macroeconomic Situation, published today by Nepal Rastra Bank (NRB).
However, the government has spent less than it did in the same period the last fiscal year. The total government expenditure increased by 14.2 per cent to Rs 91.8 billion compared to an increase of 32.5 per cent in the corresponding period the previous year. "The deceleration in such spending was mainly due to a decline in the capital expenditure -- spending on development works," said the central bank.
Meanwhile, recurrent expenditure -- spending on salaries and wages -- increased by 20.1 per cent to Rs 61.4 billion. In the corresponding period the last fiscal year, recurrent expenditure had increased by 19.2 per cent.
In the review period, the government has a cash surplus of Rs 26.5 billion with the central bank.
Revenue mobilisation has also grown by 38.6 per cent to Rs 84 billion compared to an increase of 26.2 per cent in last fiscal year's corresponding period. The non-tax revenue has a huge contribution to the increase of revenue -- it grew by 96 per cent to Rs 17.0 billion compared to an increase of 15.9 per cent in the same period last fiscal. "Such an increase in non-tax revenue was on account of increase in dividends paid by some public enterprises to the government," the central bank said.
The overall Balance of Payment (BoP) recorded a significant surplus of Rs 34.8 billion in comparison to a surplus of Rs 13.6 billion in the corresponding period the previous fiscal year.
The y-o-y increase in consumer price inflation rose to 13.1 per cent in mid-March 2009 compared to 7.2 per cent in mid-March 2008. The price hike was fueled by price hike in food and beverages group.
The y-o-y wholesale price inflation also increased to 12.3 per cent in mid-March 2009 compared to a growth of 6.6 per cent a year ago. "The index of agricultural commodities, imported commodities and domestic manufactured commodities increased by 15.3, 10 and 8.8 per cent respectively in the review period compared to a growth of 4.9, 7.8 and nine per cent a year ago," said the report.
The overall y-o-y salary and wage rate index also rose by 20.3 per cent compared to a rise of nine per cent a year ago.