FNCCI wants upcoming budget to revive business confidence

Budget will uphold good governance: FM Dr. Wagle

 

Kathmandu, May 17

Through the budget of the upcoming Fiscal Year 2026/27, the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has advised the Finance Ministry to revive declining business confidence, generate demand in the market and re-attract stalled investment.

Employment generation should also be the top priority and get required polity attention, the FNCCI informed in a statement.

Submitting its budget recommendations to Finance Minister Dr. Swarnim Wagle at the Ministry of Finance (MoF) on Sunday, the FNCCI suggested to introduce the upcoming budget in a manner that would bring about economic transformation.

Stating that the forthcoming budget is not merely an ordinary annual document but one arriving at a critical juncture in Nepal’s economic history, the FNCCI suggested a fundamental transformation of the current economic model.

Presenting the recommendations to FM Dr. Wagle, President Anjan Shrestha said that an economy based on remittance and imports could not ensure long-term prosperity, and that the private sector remained hopeful of a transformative budget.

“Frequent annual changes in tax policy have eroded investor confidence. The private sector has called for an end to the unstable practice of annual fiscal acts and the implementation of a single revenue code with clear interpretation, along with the formation of an autonomous Revenue Board," he said.

Shrestha further added that there must be a clear assurance that tax laws will not be applied retrospectively.

The country’s industrial production capacity is currently limited to 40 per cent, the construction industry has reached the most difficult period in its history, and the contribution of the private sector to gross fixed capital formation has declined from 28 per cent to 16 per cent over the past four years. In such a situation, the budget must revive the economy, said Shrestha.

The FNCCI also drew the government’s attention to the fact that while Nepal’s average economic growth rate over the past two decades has remained at only 4 per cent, tax growth has reached 11 per cent. Revenue as a proportion of GDP has exceeded 19 per cent, making Nepal one of the countries with the highest tax burdens in South Asia.

According to the FNCCI, high taxation has increased informal transactions, illegal trade and business migration.

Referring to Nepal’s graduation from a least developed country to a developing country, the FNCCI warned that Nepal risks losing preferential market access after graduation, while transport and financing costs could further weaken Nepali products. It therefore demanded a special and long-term integrated policy for export-oriented industries such as textiles, carpets, garments, pashmina and felt products.

In its recommendations, the FNCCI also proposed a legal provision allowing Nepali companies to invest a certain portion of export earnings abroad in order to expand at regional and international levels.

The FNCCI called for stronger control over smuggling through open borders and the immediate removal of distortions under SAFTA whereby finished goods are imported more cheaply than raw materials.

President Shrestha also drew the Finance Minister’s attention to the need to safeguard the business environment and address the criminalisation of entrepreneurship.

Responding to the recommendations, Finance Minister Dr. Wagle expressed commitment to introducing a budget that would uphold good governance, strengthen private sector development, encourage investment and support employment generation.

Clarifying that the government remains committed to moving forward with the private sector as its principal partner, he urged the FNCCI delegation to remain optimistic.

“The government is sensitive to the decline in private sector confidence and the weakening market demand. The upcoming budget will lay the foundation for transforming the economic model itself,” said Finance Minister Dr Wagle.

Regarding the government’s post-LDC priorities, FM Dr. Wagle said the government had taken the matter seriously. However, he stressed that even if there were proposals to delay the timeline, preparations for the post-graduation phase must continue.

Published in The Rising Nepal daily on 18 May 2026.