Nepal's revenue rises 16% but trails target as the flood squeezes northern trade

Nepal's government is collecting more money than a year ago, but not as much as it planned. Revenue in the first two months of the 2026/27 fiscal year, from mid-July to mid-September, came to Rs 184.58bn, according to the Ministry of Finance, as reported by Onlinekhabar. That is about 16% more than the Rs 158.71bn collected in the same months last year, but only 85.93% of the Rs 214.81bn target for the period.

The comparison flatters this year a little. Last year's collection was hit in the final week of Bhadra, the second month, by the Gen Z-led protests. This year the government collected Rs 91.38bn in Bhadra, against Rs 73.61bn a year earlier and a monthly target of Rs 96.88bn, a 94.33% hit rate, Onlinekhabar reported.

A shortfall carried over

The gap with targets is not new. In 2025/26 the government collected Rs 1,280.65bn against a target of Rs 1,533.44bn, or 83.51%, according to Financial Comptroller General Office figures reported by B360. Foreign grants came to Rs 31.26bn, 58.5% of the Rs 53.45bn expected. The finance ministry had already cut its estimate of revenue and other receipts at the mid-year review to Rs 1,298bn from Rs 1,480bn, The Rising Nepal reported. Nepal Rastra Bank's annual data, which use a different measure, put total revenue for the year at Rs 1,241.32bn, of which Rs 1,121.08bn was tax.

Against that record, the target for 2026/27, Rs 1.58 trillion, is ambitious. Meeting it would require collection about 23% above last year's actual figure.

The first month gave a mixed picture. Nepal Rastra Bank's report for mid-July to mid-August showed total revenue up 9.2% to Rs 92.23bn, with tax revenue up 5.6% and non-tax revenue up 85.4% to Rs 7.03bn. Government spending in the month was Rs 41.89bn, 9.5% less than a year earlier; capital spending was Rs 1.33bn.

The border effect

Customs offices on the southern border are close to their targets but still short. Birgunj, the largest, collected Rs 18.72bn in Shrawan against a target of Rs 20.58bn, about 91%, and Rs 23.04bn in Bhadra against Rs 23.52bn, Kantipur reported. Mechi Customs at Kakarbhitta collected Rs 2.83bn over the two months, 92.14% of its target, though its Bhadra collection was 9.43% higher than a year before, ShareSansar reported. Its chief customs officer credited improving cross-border trade and stricter customs administration.

The north is the bigger worry. The flood of 26 August damaged the road to the Rasuwagadhi crossing and disrupted supplies. The Finance Secretary, Ghanshyam Upadhyay, told a parliamentary committee that the disruption had affected revenue, and that extra staff had been deployed to route goods bound for the Rasuwa border through the Korala crossing instead, Ratopati reported. The finance ministry expects the floods to affect collection in the coming months, particularly at northern border points, according to Onlinekhabar. The wider strain on that route is described in our report on the trade gap with China.

Imports have so far held up. Merchandise imports rose 31.0% in the first month of the fiscal year, to Rs 187.44bn, the central bank reported, with increases in petroleum products, chemical fertiliser and edible oil.

Spending pressure is rising at the same time. The government's own rapid assessment puts flood recovery needs at Rs 723.31bn, and the Asian Development Bank expects the deficit to widen to 4.7% of GDP this year.

What to watch: first-quarter revenue figures after mid-October, customs collection at the northern crossings as roads are repaired, and whether the mid-year budget review again cuts the revenue target.