The devastating Bhotekoshi floods hit at a time when Nepal has just begun a journey of political stability after several decades of instability. The country was struggling to restore investor and business confidence, mobilise the abundant liquidity piled up in banks and financial institutions, and meet the development expectations of its people amid meagre resources. But the disaster dealt a massive blow to society and the economy, severing connectivity with China and sweeping away projects and infrastructure.
The floods not only killed hundreds and left thousands unaccounted for but also damaged residences, businesses, and infrastructure like hydroelectricity projects, roads, bridges, and social facilities. It affected more than 32,000 people in Rasuwa, Nuwakot, Dhading, and Nuwakot, and left thousands homeless. According to the Rapid Disaster Needs Assessment (RDNA) conducted by the National Planning Commission (NPC) and the National Disaster Risk Reduction and Management Authority (NDRRMA), the reconstruction and recovery cost is estimated at Rs. 723.3 billion, of which Rs. 473.6 billion is needed for the rehabilitation of the damaged infrastructure.
The disaster has inflicted extensive damage on the hydropower sector. It affected 13 hydropower projects with a combined capacity of 759 MW and five solar plants of 24 MW. Rs. 390.6 billion is estimated for the restoration of these projects and grid systems. Similarly, the floods damaged 69 km of strategic roads – Pasang Lhamu Highway connecting Rasuwagadhi at the Nepal-China border and the Prithvi Highway connecting Pokhara and Chitwan. The flood-induced damage at the fragile Krishna Bhir in Dhading obstructed the movement of people and essential goods to and from the Kathmandu Valley for about two weeks, creating a shortage of cooking gas and sending up the price of food items and vegetables.
Meanwhile, the government has received Rs. 14 billion in the Prime Minister Disaster Relief Fund, and the size is ever-growing with contributions from Nepali and foreign individuals and institutions. This is a relief to the government, as it can conduct the rescue, relief and short-term reconstruction work for the next six months with the money, as the RDNA has estimated that only Rs. 8.73 billion would be needed for these works.
Poor capital spending
It seems that the trend of poor capital spending has continued this year as well. By the end of the second month of the current Fiscal Year 2026/27, the government could mobilise only 1.69 per cent (Rs. 7.26 billion) of the total capital allocation of Rs. 431.10 billion. Likewise, government income is surpassed by the total expenditures from the treasury. By mid-September, Rs. 184.24 billion has been collected in revenue, grants, and other receipts, while total expenditure reached Rs. 192.05 billion. This expenditure is largely comprised of recurrent expenses and repayment of the capital and interest of the loan.
If the government couldn't find an innovative way to speed up the public construction works and mobilise the development budget, it will further set back the national economy, hit hard by the disasters. Finance Minister Dr. Swarnim Wagle must find ways to pull the country out of the long-standing sluggish growth rate.
There is an opportunity. Concluding the Post-Disaster Needs Assessment (PDNA), managing funds and early action for post-disaster recovery and reconstruction can provide a much-needed boost to the economy. The foreign and finance ministers' activism is needed to rally the individuals, institutions, and friendly nations to provide financial support in the post-disaster reconstruction, which is almost double Nepal's annual capital allocation. For this, the two ministers should make multiple trips to various regions and countries, attend the United Nations General Assembly and the Conference of the Parties (COP).
Since it's impossible for Nepal to manage funds for the recovery and reconstruction, the government should immediately organise the donors' summit to raise funds for the post-disaster reconstruction. According to the government, experts are working on the PDNA report with an aim of completing it within three weeks. The donors' conference will be designed and executed after that.
Speeding up the infrastructure development works will not only support the physical development and increase public facilities but also help industries like cement, steel, crushers, transportation, and prefabrication.
Boosting investors' confidence
The morale of the investors and entrepreneurs has not bounced back since the destruction of businesses and industries during the Gen-Z movement in 2025. They have either cancelled or halted their investment plans or business expansion. Meanwhile, there were instances like Bhatbhateni Supermarket that resurrected from the ashes, and several businesses, including hotels, are being reconstructed.
The country's financial system is burdened with excessive liquidity, which has increased the management costs of the banks and financial institutions and impacted investors' benefits. The Nepal Rastra Bank has to spend significant efforts and funds in managing this liquidity. Enhanced investors' confidence will help in mobilising this liquidity, which in turn creates jobs, injects money into the markets, and supports growth.
Enhancing access of small and medium enterprises (SMEs) to finance will help in mobilising these funds. But the government and the central bank should simplify the business as well as the financing process to support and promote the SMEs, which are the largest employment generators in the country. Likewise, finding international markets for 'made in Nepal' goods, promoting Nepali products there, and supporting the private sector in branding them is a must-do activity. Fully implementing the domestic goods procurement guidelines in the public offices within the country should also be a priority.
Meanwhile, the government has tried to implement capital market reforms to boost confidence in the securities market. Newly appointed chairman of the Securities Board of Nepal Dr. Gopal Prasad Bhatta and Finance Minister Dr. Wagle are working towards this end. Other areas that need to be promoted are tourism and information technology. The Bhote Koshi disaster has scared away potential tourists, with many of them cancelling trips to Nepal. The government and the private sector should run an international campaign to inform people that only a small portion of the country is affected by the disaster, and world-class touristic attractions like Sagarmatha and other mountain peaks, Chitwan, Pokhara, Bardiya, and several others are ready to welcome them.
Supporting farmers should also be the priority of the government. They should be provided with good irrigation, machinery, and fertilisers. High-quality labs should be established across the country to test the soil and water, as well as the quality of farmers' produce, and cold storage should be constructed to hold the produce until they get a good market price. Expanding all-weather roads to agricultural pocket areas in the hills and mountains will create better market access, and farmers will get a fair price for their produce.
Use of natural resources
Preserving the natural resources just for the sake of conservation will not benefit the communities and the economy. The nation must find a way to fully utilise the available resources, including the forest-based and river-based resources, to support businesses and industries and promote entrepreneurship. Opening up the forests for scientific management, allowing enterprises access to available resources, will help create entrepreneurs and businesses locally, thus creating jobs for the people and strengthening the local economy.
Currently, the country is preserving timber and non-timber products and importing wood for furniture and other products. Likewise, it is wasting an immense potential for exporting construction materials to India and Bangladesh. It is impossible for economic development to accelerate and become more widespread without taking advantage of these great natural resources.
Published in The Rising Nepal's Friday Supplement on 18 September 2026.
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