Budget is framed for growth: DPM Paudel

Kathmandu, May 31

Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel has announced that Nepal’s upcoming fiscal year budget has been designed to achieve an economic growth rate of 6 per cdnt. Speaking at a post-budget discussion organised by the Nepal Association of Financial Journalists (NAFIJ) on Saturday in Kathmandu, he expressed confidence that the budget, built on sound principles and fiscal discipline, could be effectively implemented.

Highlighting the realism of the 6 per cent growth target, DPM Paudel said that the country had previously achieved 7.5 per cent growth, so this year's target is achievable with coordinated effort. “The budget follows fiscal principles and adheres to financial limits. It has been framed with proper resource mobilisation in mind,” he said.

However, he acknowledged that while the revenue targets are ambitious, they are achievable with diligence. “We must work to meet the targets. Without effort, nothing is possible,” he said.

DPM Paudel also claimed that borrowing to meet the budget deficit had been planned responsibly to cover principal and interest payments without overstretching the economy. He urged stakeholders not to worry excessively about resource mobilisation, stating that the budget has avoided the pitfalls of overly fragmented micro-project allocations, instead focuses on effective programme delivery to make tangible results.

Speaking at the same event, Vice-Chairman of the National Planning Commission (NPC), Prof. Dr. Shiva Raj Adhikari, said that this year’s budget-making process was more structured, with reforms including the exclusion of projects costing less than Rs. 30 million from the federal budget.

“Previously, budget allocations were scattered across too many small projects. This time, we have taken corrective measures,” he said, adding that better coordination among the Ministry of Finance, NPC, and relevant stakeholders has led to a more targeted and youth-friendly budget that would promote entrepreneurship and startups.

Former Finance Minister Janardan Sharma welcomed the emphasis on private sector involvement but stressed the need for critical assessment of policies and allocations adopted by the budget.

“While some policies are commendable, we must be realistic. The economic structure still requires substantial reforms, especially in agriculture, trade balance, and industrial output,” he said.

Sharma also noted the importance of addressing declining development expenditure, which currently stands at a modest Rs. 91 billion. “Without qualitative capital spending, desired outcomes are unlikely,” he said.

President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Chandra Prasad Dhakal, appreciated the government’s decision to allow foreign investment by Nepalis.

However, he stressed the importance of execution over mere announcement stating that the private sector was ready to support the government in implementing the budget.

President of the Nepal Chamber of Commerce (NCC), Kamlesh Kumar Agrawal, described budget of the upcoming year as development-oriented and somewhat ambitious despite the current challenging circumstances.

According to him, there is a need for reforms in exports to India, and monetary policy support to address economic contraction.

Likewise, Immediate Past President of the Confederation of Nepalese Industries (CNI), Vishnu Agrawal, also supported the budget, calling it positive and investor-friendly.

But he said that industrial growth should be supported with policy implementation since revenue goals could only be met through increased production and investment. According to him, energy policy and customs reforms are important to spur industrial growth.

President of the Federation of Contractors’ Association of Nepal, Ravi Singh, described the budget as promising but emphasised that 90 per cent capital expenditure execution must be targeted in the upcoming year.

"Although the provision for completing flagship projects within two years is a welcome step but sick projects still lack adequate attention in the budget document," he said.

However, President of the Independent Power Producers Association, Ganesh Karki, expressed concern over financing limitations due to IPO restrictions and purchase obligations for produced electricity.

“There is uncertainty in the energy sector because of delayed project executions and ambiguous electricity procurement policies,” he said.

President of the NADA Automobiles Association, Karan Chaudhary, appreciated the budget for giving recognition to the automobile sector, and said that it would help dispel misconceptions about the industry’s contributions to the national economy.

Similarly, Executive Director of the Nepal Rastra Bank, Guru Prasad Paudel, said that the removal of digital transaction taxes would support the growth of the digital economy and that foundational work for digital banking was underway.

Economist and former NPC member Dr. Ramesh Paudel said that the budget was private sector-friendly but fell short on deep structural reforms. “The informal economy still dominates, and unless brought into the formal fold, tax and capital spending reforms will remain inadequate,” he said.

He also noted that only 5 per cent of GDP is currently being spent on capital expenditure and called for more efficient public spending and domestic resource mobilisation.

Published in The Rising Nepal daily on 1 June 2025.