Government fails to clear dues accrued for subsidies on time due to slow revenue collection 

KATHMANDU, April 9: The government has been reluctant to fulfill its commitment to provide the promised amount of subsidies across several sectors, resulting in a significant accumulation of unpaid dues for the affected businesses.

With the government facing slow revenue collection, it has been delaying the payments of the subsidized amounts that it had announced for various businesses. The government records as of mid-March show that the country’s budget deficit reached Rs 137.75 billion, while the revenue collection stood at only 44.92 percent of the annual target in the eight months of the current fiscal year.  

Owing to the shortfall of revenue collection, the government is dilly dallying to clear the dues of Rs 2 billion that it had committed to provide in premium subsidies. It has not even paid around Rs 12 billion in subsidized loans. In addition, it has also been delaying payment of Rs 1.10 billion dues for cash incentives in exports.

Chunky Chhetry, president of the Nepal Insurers’ Association, said the government has recently released Rs 560 million to the insurers. He added that the government paid the amount only after the insurers stopped selling their policies citing the delay in recovering the dues from the government. According to him, the government is yet to clear around Rs 2 billion under the heading. 

With much hype, the government introduced crops and livestock insurance in January 2013. For its effectiveness, the government announced a 50 percent subsidy on insurance premiums, which was later increased to 75 percent.

Likewise, the government has not paid around Rs 12 billion of interest subsidies in loans issued by banks since one and a half years ago. One year ago, the government settled Rs 2.57 billion dues under the heading.

According to the records with Nepal Rastra Bank, the government paid Rs 22.39 billion of subsidized interest as of November 2022. The banks and financial institutions (BFIs) have not received the amount in the following months. 

The government had announced to allocate Rs 11 billion for the sake of providing interest subsidies to banks for the current FY. However, the banks have failed to receive the amount till date. “Given the situation, the banks may not issue any such loans to needy borrowers in the future,” said a banker.

Abided by the government rules, the BFIs have issued subsidized loans since 2016. The threshold was maintained at Rs 20-50 million in this type of loan.  

Similarly, the exporters have sought to recover Rs 1.10 billion of cash subsidies that the government announced on exportable items. Although the government has provided Rs 900 million this year, it is uncertain when the government will provide the additional amount, according to an official of the Ministry of Industry. 

 
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