Budget grounded in reality: DPM Paudel

Kathmandu, Jun 2

Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel said that the budget for the upcoming fiscal year 2025/26 is grounded in reality rather than driven by populism. Speaking at a discussion programme organised by the Economic Media Society Nepal (EMSON), Minister Paudel emphasised that he opted for discipline and pragmatism over political popularity in shaping the national budget.

“There is a general perception that a finance minister from the CPN (UML) would bring a populist budget. But I consciously tried to steer away from that mindset,” said Paudel while adding, “Rather than asking what would make me popular, I asked what would make the budget more disciplined, what would widen revenue sources, and how we could better manage our spending.”

Paudel stressed that while he respected all views shared on the budget, his main goal was to ensure the allocation remained within the bounds of resource availability. “The volume of mandatory obligations has increased, and we have attempted to manage that along with prioritising development expenditure,” he added.

FM Paudel claimed the budget was designed to uplift private sector confidence and expand investment avenues. “This budget will help revitalise the economy, boost productivity, and create jobs,” he asserted, noting that the implementation of the budget was now his primary responsibility.

According to him, he has emphasised on the execution of the budget.

Speaking on the occasion, former Finance Minister Dr. Prakash Sharan Mahat expressed cautious optimism.

He welcomed the trimming of over 4,500 projects as a positive step toward better implementation. He criticised the political trend of including unnecessary projects for short-term popularity.

“The real issue is populism. Popular decisions now may become unpopular in the future. The focus should be on fewer, implementable projects based on resource availability,” he said.

He also called for reforms in capital expenditure and suggested granting tax holidays in sectors like information technology.

Highlighting the under-utilised land in hilly regions, he proposed its use for commercial farming with subsidies tied to actual production. Dr. Mahat praised elements of the budget aimed at attracting private investment and urged Nepal Rastra Bank to align its monetary policy with the budget's objectives.

Likewise, former Finance Minister, Janardan Sharma, strongly criticised the budget, calling it 'neither realistic nor grounded in Nepal’s economic needs'.

He pointed out that despite claims of boosting employment and production, the budget lacks concrete measures for reviving sick industries. Citing a massive Rs 4 trillion loss in the hydropower sector, he criticised the silence of major private institutions.

Sharma described the budget as drifting towards neoliberalism and distorted capitalism, and it has deviated from Nepal’s constitutionally mandated goals of social justice. He also raised serious doubts about revenue targets, including Rs. 332 billion in foreign aid and Rs. 362 billion in domestic loans, questioning their feasibility.

“The system punishes those who work and rewards those who don’t,” he lamented.

Sharma criticised delays in implementation due to policy and structural hurdles. He also warned that without clear revenue sources, the budget would remain unimplemented and pose economic risks.

President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Chandra Prasad Dhakal, said the budget for the next year incorporates many of the private sector's recommendations. He maintained that the budget positions the private sector as a key driver of economic growth and has energised the business community.

He emphasised that the private sector’s demands have always been focused on national economic reform, not merely self-interest.

While welcoming the inclusion of export provisions for Nepal’s mineral resources, the issue which is long advocated by the private sector, he stressed the importance of proper implementation.

Dhakal also highlighted that facilitation of the Special Economic Zones (SEZs) lease costs and infrastructure for international convention centres were positive steps.

However, he expressed concern over provisions like the PPA (Power Purchase Agreement) and 'Take and Pay' model in the hydropower sector, which could discourage foreign investment and complicate financing.

He praised foreign currency policy changes for border hotels as a boost for tourism. Nonetheless, he concluded that effective implementation and good governance are critical if the budget's 6 per cent growth target is to be achieved. 

Published in The Rising Nepal daily on 3 June 2025.