The government is contemplating budget reductions for the ongoing fiscal year due to strained spending capacity, with an anticipated modest increase for the next year. Fiscal austerity aims to address the disparity between income and expenses, exacerbated by inflation and pressure on foreign currency reserves. The Fiscal Coordination Council, chaired by Finance Minister will convene to discuss draft outlays for the revised 2023-24 budget and the upcoming 2024-25 budget. The focus of the next budget will be on curbing consumer prices, expanding social safety nets, and reducing subsidies, except for agriculture and food sectors. Inflation, persisting above 9.5%, poses challenges for low-income individuals. The FY24 budget may be reduced by 6.16%, with cuts to development programs and revenue budgets, while interest payments and subsidies could increase. The FY25 budget may see a marginal 4.9% increase, aiming to limit the deficit to 5% as per IMF recommendations. Revenue targets for the National Board of Revenue might be revised downwards, reflecting challenges in tax collection.
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