The budget deficit reached eight billion rupees in mid-May forcing the government to overdraw close to two billion rupees despite improvement in revenue collection. The deficit reached Rs 7.8bn, a 19%, increase over the same period last year, the Nepal Rastra Bank said in its 10th monthly report on the economy. The government also overdrew Rs 1.8bn from the Central Bank. By law the overdraft has to be less than one billion at the end of the fiscal year.

Government spending increased by 10.2 percent to Rs 40bn, at a rate slower by four percentage points compared to the same period last year. Regular expenditure grew by 9.5 percent and development spending by 10%. The deficit was due to slow resource mobilisation, which grew by a mere 8.3 percent compared to last year\'s 15.5% growth rate. Revenue collection (11.2%) was slightly better this year, it brought in Rs 30.8bn.Inflation has remained under control with prices growing by just 1.8% compared to 10.8% during the comparable period last year.