Govt announces waivers on customs duty, loan interest and taxes for flood-hit businesses

 Cabinet approves business recovery package

 

Kathmandu, Sept. 3

The government has announced a business recovery package, for the businesses and industries affected by the Bhotekoshi flood, with a full custom duty waiver for the import replacements of the plants or equipment that were destroyed beyond repair.

Such waiver will be applied for the machines and equipment of the same type and up to the quantity destroyed.

As per the full text of the package endorsed by the Cabinet on Thursday, owners of commercial vehicles and means of transport damaged beyond repair or lost in the floods will be allowed to cancel their registration and re-import similar vehicles without paying customs duties.

Similarly, importers whose goods were destroyed by the August 26 floods before reaching their destination will be allowed to adjust the customs duties they had already paid. The facility will apply if replacement goods of the same type are imported through any customs office within six months, read the text shared by the Ministry of Finance (MoF). The Department of Customs will make arrangements to implement these provisions.

Likewise, the government has announced measures to speed up insurance claim assessments and settlements for businesses and individuals affected by the floods.

Under the package, the National Insurance Authority (NIA) is directed to make arrangements to deploy surveyors through a simplified procedure to expedite the assessment of flood-related insurance claims.

"Insured individuals and businesses will also be eligible for advance payments of up to 50 per cent of their claims based on preliminary assessment reports. Reinsurers will similarly be required to provide insurers with advance payments of up to 50 per cent," according to the package.

Likewise, insurers have also been directed to promptly introduce a simplified procedure for settling flood-related insurance claims to make the process faster and more efficient.

 

Loan and interest relief

The government has announced a series of loan and interest relief measures for borrowers affected by the Bhotekoshi floods, aimed at supporting business recovery and ensuring continuity of economic activities. These measures will be arranged and implemented by the Nepal Rastra Bank (NRB).

As per the package, Banks and Financial Institutions (BFIs) can restructure or reschedule the loan or extend the repayment period for principal and interest for the borrowers whose goods being imported through the Rasuwagadhi Customs had been damaged.

However, this facility will be provided on the basis of the nature of the business and goods, the extent of damage and insurance claims, among other factors.

Similarly, flood-affected borrowers will also be eligible for a one-off restructuring or rescheduling of loans taken from the BFIs, along with an extension of the repayment period for principal and interest.

"Banks will also provide loans to businesses seeking to replace commercial vehicles, transport equipment, machinery or other equipment damaged by the floods. Such loans will be available at the bank's base rate plus the prescribed minimum premium," said the government while also pledging to review the applicable loan-to-value ratio of such lending.

For one year, flood-affected borrowers will be charged the lower of either the bank's base rate plus a 0.5 percentage-point premium or the rate resulting from adding the existing premium to the bank's base rate.

The central bank will also allow banks to provide additional loans, at borrowers' request, to support the recovery of industries and businesses or protect employment. Such loans may be paid directly into the account of the relevant third party.

 

Tax waivers for businesses

Meanwhile, the government also announced a range of tax relief measures for taxpayers affected by the Bhotekoshi floods, including an extension of tax filing and payment deadlines and simplified procedures for claiming VAT on damaged business assets.

The Inland Revenue Department (IRD) is directed to extend the deadline for the submission of VAT, income tax, and excise duty for flood-affected businesses and individuals until November 11.

It will also simplify the procedure for adjusting VAT claims on business assets damaged by the floods.

Likewise, businesses will be allowed to deduct the value of assets completely destroyed by the floods as a lump-sum expense for tax purposes while for partially damaged depreciable assets, the limit on deductions for repair and improvement costs will not apply when calculating taxable income for FY 2025/26.

Individuals directly affected by the floods will get full exemption from income tax for this year. The government said that it will further request provincial and local governments to provide concessions for a specified period on property tax, business tax, building plan approval fees and other local charges related to flood-damaged businesses and property.

In addition, contributions made by business institutions to the Prime Minister’s Disaster Relief Fund (PMDRF) in fiscal year 2026/27 from the funds set aside for Corporate Social Responsibility (CSR) will be recognised as CSR expenditure.

The relevant authorities have been directed to amend the applicable laws, regulations and guidelines to facilitate this arrangement.

Published in The Rising Nepal on 4 September 2026.   

BOP shows positive growth in current fiscal year

Kathmandu, Aug. 27

With the shrinking economic and business activities in the country in the past few years, the financial indicators, including the current account, capital transfers, and Balance of Payments (BOP), showed positive growth that doubled their position in the Fiscal Year 2025/26 compared to FY 2024/25.

Current account surplus went up by more than a double in 2025/26 to reach Rs. 923.56 billion from Rs. 409.84 billion in FY 2024/25. In US Dollar terms, the current account registered a surplus of 6.33 billion in the review year against a surplus of 3.01 billion in the previous year, the Nepal Rastra Bank (NRB)'s annual macroeconomic situation report published on Wednesday.

Last year, Net capital transfer amounted to Rs. 18.50 billion which is also almost double of Rs. 9.84 billion of FY 2024/25. Nepal received equity-based Foreign Direct Investment (FDI) of Rs. 28.49 billion last year against Rs. 12.02 billion of the previous year.

Likewise, the Balance of Payments (BOP) remained at a surplus of Rs. 1027.04 billion last year compared to a surplus of Rs.594.54 billion in the previous year.

Meanwhile, the government mobilised domestic debt of Rs. 358.66 billion and made principal repayment of Rs. 250.56 billion thereby mobilising net domestic debt of Rs. 108.10 billion in 2025/26. Net domestic debt mobilisation stands at 1.6 per cent of GDP.

The government mobilised external loans of Rs. 88.50 billion during the year. The NRB reported that the outstanding public debt amounted to Rs. 2927.90 billion in mid-July 2026. Of which, foreign and domestic debt stood at Rs. 1599.48 billion and Rs. 1375.42 billion, respectively.

With this, the ratio of total outstanding public debt to GDP reached 45.07 per cent in 2025/26, which was 43.06 per cent in 2024/25.

According to the report, deposits at Banks and Financial Institutions (BFIs) increased by 13.9 per cent (Rs.1,013.05 billion) reaching Rs. 8,276.93 billion in 2025/26 compared to an increase of 12.6 per cent (Rs.811.49 billion) in the previous year.

The share of demand, saving, and fixed deposits in total deposits stood at 8.1 per cent, 47.0 per cent and 35.3 per cent, respectively, in mid-July 2026. The share of institutional deposits in total deposit of BFIs stood at 33.9 per cent in mid-July 2026. Such a share was 36.1 per cent a year ago.

Likewise private sector credit from BFIs increased by 6.5 per cent (Rs. 359.36 billion) to Rs. 5,857.06 billion last year compared to an increase of 8.4 per cent (Rs. 423.73 billion) in 2024/25. The shares of private sector credit from the BFIs to non-financial corporations and households stood at 62.1 per cent and 37.9 per cent, respectively, in mid-July 2026.

Last year, private sector credit from commercial banks, development banks, and finance companies increased by 6.5 per cent, 7.0 per cent, and 5.4 per cent, respectively.

Out of the total outstanding credit of the BFIs, 15.1 per cent is against the collateral of current assets (such as agricultural and non-agricultural products) and 62.9 per cent against land and building. Such ratios were 14.5 per cent and 64.7 per cent, a year ago.

The report noted that the outstanding loan of the BFIs to construction sector increased by 18.6 per cent, consumable sector by 17.8 per cent, transportation, communication and public sector by 15.0 per cent, industrial production sector by 5.2 per cent, finance, insurance and fixed assets sector by 5.0 per cent, and service industry sector by 4.4 per cent, while agriculture sector decreased by 1.8 per cent.

Similarly, the weighted average 91-days Treasury bills rate was 2.32 per cent in mid-July 2026 against 2.95 per cent in mid-July 2025. The weighted average inter-bank rate among the BFIs, which was 2.96 per cent in mid-July 2025, decreased to 2.75 per cent in mid-July 2026.

The average base rate of commercial banks, development banks, and finance companies stood at 4.83 per cent, 6.58 per cent, and 7.09 per cent, respectively, in mid-July 2026. 

Published in The Rising Nepal on 28 August 2026.   

Remittance inflows reach Rs. 2.36 trillion

Kathmandu, Aug. 26

Remittance inflows has broken all previous records to reach Rs. 2363.13 billion in the Fiscal Year 2025/26, with an annual increase of 37.1 per cent. In the FY 2024/25, the country received remittance Rs. 1723.27 billion which was an increase of 19.2 per cent compared to the previous year.

In the last month of the last fiscal, mid-June to mid-July, remittance inflows stood at Rs. 242.33 billion against Rs. 189.11 billion during the same period a year ago.

Net secondary income (net transfer) reached Rs. 2581.53 billion in 2025/26 compared to Rs. 1874.30 billion in the previous year, the Nepal Rastra Bank (NRB) stated in its annual Macroeconomic and Financial Situation report published on Wednesday.

The number of Nepali workers, both institutional and individual, taking first-time approval for foreign employment stands at 406,519 and taking approval for renewal of entry stands at 385,783. In the previous year, such numbers were 505,957 and 333,309 respectively.

Meanwhile, gross foreign exchange reserves increased by 45.6 per cent to Rs. 3897.67 billion in mid-July 2026 from Rs. 2677.68 billion in mid-July 2025. In US dollar terms, foreign exchange reserves increased to 25.31 billion from 19.50 billion within a year.

Of the total foreign exchange reserves, the reserves held by the NRB increased by 43.8 per cent to Rs. 3473.19 billion from Rs. 2414.64 billion. Reserves held by banks and financial institutions increased by 61.4 percent to Rs. 424.48 billion from Rs. 263.04 billion. The share of Indian currency in total reserves stood at 22.3 per cent in mid-July 2026.

The NRB informed that based on the imports of 2025/26, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 23 months, and merchandise and services imports of 19.6 months.

 

Inflation climbs to 5.14 per cent

According to the central bank, consumer inflation more than doubled by the end of the last year. The year-on-year consumer price inflation stood at 5.14 per cent in mid-July 2026 compared to 2.20 per cent a year ago. The annual average consumer price inflation stood at 3.08 per cent in FY 2025/26 compared to 4.06 per cent a year ago.

Under the food and beverage category, the annual average consumer price index of ghee and oil sub-category increased 10.05 per cent, fruit 7.09 per cent, and non-alcoholic drinks 3.28 per cent while the annual average consumer price index of vegetable decreased 3.95 per cent, spices 3.66 per cent and pulses and legumes 3.41 per cent.

Likewise, under the non-food and services category, the annual average consumer price index of miscellaneous goods and services sub-category increased 17.61 percent, education 7.04 per cent, transportation 5.80 per cent and clothes and footwear 5.56 per cent.

In terms of region, the annual average consumer price inflation of FY 2025/26 in the Kathmandu Valley was 3.16 per cent, Terai 3.28 per cent, Hill 2.81 per cent and Mountain 2.73 per cent. respectively.

The annual average consumer price inflation in rural areas was 2.65 per cent while it was 3.22 per cent in urban areas. In mid-July 2026, the y-o-y consumer price inflation in rural areas increased by 4.99 per cent while in urban areas, it rose by 5.19 per cent.

Based on provinces, the annual average consumer price inflation in Koshi was 3.77 per cent, Madhesh 3.65 percent, Bagmati 2.79 per cent, Gandaki 2.59 per cent, Lumbini 3.29 per cent, Karnali 2.60 per cent, and Sudurpashchim 2.05 per cent.

Published in The Rising Nepal on 27 August 2026.   

FNCCI meets labour minister

Kathmandu, Aug. 21

The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) delegation, led by President Anjan Shrestha, met with Minister for Youth, Labour and Employment Ramji Yadav and discussed timely amendments to labour laws, promotion of domestic employment, management of labour market demand and supply, and industrial relations.

The FNCCI stressed that amendments to labour laws should be pursued in line with the changing labour market, industrial requirements and the country’s economic transformation. "Labour laws should be balanced and practical, encouraging investment and job creation, enhancing the competitiveness of industries, and ensuring workers’ rights and social security," it said in a statement.

“Along with amending labour laws, we need to consider what we want Nepal’s employment situation to look like over the next 10 years, while making the best possible use of the demographic dividend the country currently enjoys,” Shrestha said.

In response, Minister Yadav said the ministry was currently working on the first phase of amendments to the Labour Act and that consultations with relevant stakeholders would begin once the ministry completed its preliminary work. He also urged the FNCCI to undertake the necessary studies and preparations in parallel, and said the federation and other stakeholders would soon be invited for discussions.

He added that the practical experience and institutional recommendations of the private sector should be incorporated while amending the Labour Act 2017 and other labour-related laws. “Amendments to labour laws should not be pursued merely as legal reform, but as an economic reform linked to industrial investment, production, productivity, job creation and the long-term transformation of the labour market,” he said.

Regarding the Child Labour (Prohibition and Regulation) Bill 2083, which is under consideration in Parliament, the FNCCI expressed its commitment to the objective of eliminating child labour. However, it said provisions relating to implementation, compliance by industries and businesses, investigation, and penalties should be made practical and enforceable.

The FNCCI also stressed the need to effectively implement the concept of one establishment, one official trade union to promote stability, dialogue and productivity in industrial relations.

Minister Yadav said the amendment of the Labour Act also required serious discussion on issues related to the platform economy. He said he had already instructed the committee to invite employers’ and trade union representatives who participated in the 114th International Labour Conference to provide their suggestions.

Prabal Jung Pandey, chairperson of the FNCCI’s Employer Council, said an effective mechanism was needed to test and certify the skills of Nepalis returning from foreign employment.

He also called for skills testing of workers already employed in the domestic labour market, followed by reskilling and capacity-building programmes in collaboration with industries.

Published in The Rising Nepal on 22 August 2026.   

NRNA seeks simplified legal procedures, investment security in Nepal

Kathmandu, Aug. 16

Representatives of the Non-Resident Nepali Association (NRNA) have said they remain keen to invest in Nepal but identified two major obstacles - cumbersome legal procedures and concerns over investment security.

Speaking at the 11th Asia-Pacific Regional Conference of the Non-Resident Nepali Association (NRNA) that concluded in Guangzhou of China on Sunday, they said that Nepalis living across the Asia-Pacific region, as well as in the United States and Europe wanted to do something in Nepal but were primarily discouraged by the lengthy legal processes and security concerns they faced when investing in the country.

Former NRNA president Binod Kunwar, who is a successful businessman based in South Korea, said Nepal's tendency to engage in more talks than action was also a problem. He said investors were discouraged by cumbersome legal procedures and prolonged delays, the NRNA informed in a statement.

“I am investing equally in Nepal and South Korea. My experience is that there is too much talk and too little work in Nepal,” Kunwar said while adding that Nepal's laws sometimes prevented people from working for even four or five hours, making investment in the country unnecessarily difficult.

Former NRNA president Dr. Upendra Mahato said every Nepali living abroad was concerned about when their country would develop, while many also asked themselves, “If I don't do it, who will?” He urged the government to turn this sentiment into an opportunity.

According to him, Nepal will be built by Nepalis themselves. "If a country could be developed through good and sweet words alone, it would have been developed long ago. We Nepalis are good at talking,” he said. “Now we need to develop the country while preserving our civilisation. This is the one commitment we all need to make.”

Dr. Mahato said that the investment by the NRNs alone cannot make Nepal prosperous, but it cannot happen without them either. The government must now understand this reality and introduce investor-friendly laws. There should be no delay in the legal reforms required for restructuring, he said.

Arguing that there was no better place for investment than Nepal, Mahato said every country in the world faced problems, but the key was how those problems were addressed and how investment was protected.

NRNA Senior Vice-President Rabin Sherchan said there were many areas for investment in Nepal, while some new sectors also needed to be identified, adding that investment should now be increased.

Former NRNA China president Nirmal Sharma Chaulagain said there was considerable scope for cooperation between Nepal and China but that inadequate infrastructure remained a major obstacle. He said they could currently supply goods to Nepal through the northern border points for only about six months a year and that industrialists suffered substantial losses when goods were left at border points for extended periods because the government failed to develop infrastructure on time.

Similarly, former NRNA China president Rohit Agrawal said every investment needed to be linked to profitability and that this required legal guarantees.

“In Nepal, legal complications and prolonged problems are constantly cited, making investors wonder whether or not to bring their investment into the country,” he said. “I invested in a hydropower project, but I do not know when it will start generating electricity, while I am already bearing losses.”

Arun Kumar Subedi, who has been researching investment issues, said NRNA investment would not come to Nepal as long as the existing system and laws allowed government officials to focus on finding ways to obstruct investors rather than providing the facilities they needed to invest and operate their businesses.

He added that the income of Nepalis living abroad was more than three times Nepal's GDP, and the country needed to benefit from this resource.

Roshan Khanal, acting ambassador of Nepal to China, said the embassy would provide support if potential investment areas were properly identified. She said 61 per cent of Nepalis who have achieved success in business while living in China had expressed to her their desire to return to Nepal.

 

Demand for citizenship continuation

Meanwhile, the NRNA has once again renewed its demand for the continuation of Nepali citizenship by descent for Nepalis and people of Nepali origin living abroad.

The conference reiterated the NRNA's long-standing call to put the concept of ‘Once a Nepali, always a Nepali’ into practice. Participants stressed that non-resident Nepalis should not be viewed merely as a community that sends remittances, but as partners in Nepal's economic, social and overall development, according to the NRNA.

NRNA President Dr. Hemraj Sharma said that whenever the expectations of non-resident Nepalis are discussed, issues such as citizenship, voting rights, British Gurkhas and people of Nepali origin who are foreign nationals (PNOs) inevitably arise.

According to him, the major common demand of Nepalis living in 110 countries is the continuation of citizenship by descent.

Dr. Sharma said Nepal needed an umbrella law covering all these groups. Rather than addressing citizenship issues in isolation, he argued that a comprehensive legal framework should be developed to resolve the problems faced by non-resident Nepalis.

NRNA chief patron and former president Dr. Badri KC said non-resident Nepalis who send substantial amounts of remittances to Nepal are still having to fight for their citizenship rights.

He said Nepalis and people of Nepali origin who have achieved success in education, business and various other fields abroad, particularly the younger generation, want to return to Nepal and contribute to the country. Nepal should therefore create an environment in which their knowledge, skills, capital and experience can be utilised, he said.

Speaking on the occasion, Bhishmaraj Angdembe, parliamentary party leader of the main opposition Nepali Congress, said the focus should now shift from emotional appeals to integrating the diaspora as a partner in Nepal's development.

He said citizenship should not become a major obstacle preventing the diaspora from maintaining links with Nepal. The government should take the initiative, he said while adding that other political parties, including the opposition, were also ready to cooperate.

Ain Mahar, chief whip of the CPN-UML, said he was positive about providing non-resident Nepalis with a dignified Nepali identity. “Let the government initiate the process, we are ready for discussions,” he said.

Likewise, Rastriya Swatantra Party (RSP) lawmaker Manish Jha said the government was preparing to address some of the demands of non-resident Nepalis, including citizenship.

Jha said he had been discussing the citizenship issue with Finance Minister Swarnim Wagle and Foreign Minister Shisir Khanal, and that the issue remained a government priority. 

  Published in The Rising Nepal on 17 August 2026.  

Nepali products on display in Bangkok

Kathmandu, Aug. 8

A month-long exhibition of Nepali art and handicraft products has been inaugurated in Bangkok by the Embassy of Nepal in Thailand, with the aim of promoting Nepali art and increasing exports of Nepali handicraft products.

The exhibition will run at River City Bangkok until August 30.

Titled ‘Tiger & Torma: Timeless Tales of Nepal’, the exhibition combines handicrafts reflecting Nepal's Buddhist philosophy, art, culture and traditions with products made from natural raw materials and contemporary artistic expressions, the Embassy informed in a statement.

The exhibition, features artworks produced by skilled craftspeople associated with cottage industries in different parts of Nepal, using local materials including allo (Himalayan nettle), hemp, cotton, Dhaka fabric and wool, based on designs by Thai royal artist Sakun Inthakul.

Works by Dolpa-based artist Tenzin Norbu and Dhaka textile artisan Chunu Bastola are also on display, along with carpets produced by Kumbeshwar Technical School and Nepali carpet manufacturers, paintings, floral art and other cultural artworks.

The exhibition's title refers to ‘Tiger’ and ‘Torma’, symbols in Himalayan Buddhist culture. "The tiger represents courage, strength, fearlessness and human potential transformed into wisdom through practice and training. Torma represents generosity, sacrifice, detachment and purification, as well as compassion towards all living beings," read the statement.

Visitors can explore four artistic experiences related to Nepal's Himalayan art, culture and spiritual traditions. These include contemporary Himalayan carpets and paintings inspired by torma, objects associated with Himalayan art and culture, floral sculptures made from allo and hemp fibres, and tiger-themed artworks created from handwoven Dhaka textiles.

The opening ceremony was attended by ambassadors and representatives of diplomatic missions, senior Thai government officials, businesspeople, representatives of academic institutions and the private sector, members of the art and cultural community, representatives of Nepali organisations in Thailand, members of the Nepali community and media personnel.

Nepali dishes were also served to promote Nepal's cuisine alongside its art and culture.

  Published in The Rising Nepal on 9 August 2026. 

Keep taxpayers satisfied: Minister Wagle

Kathmandu, July 23

Finance Minister Dr. Swarnim Wagle has instructed tax administrators to collect revenue by keeping taxpayers satisfied, not by intimidating them.

Addressing tax officers under the Inland Revenue Department (IRD) from across the country at the department's headquarters in Lazimpat on Thursday, he urged officials to adopt a taxpayer-friendly approach.

"Collect taxes by keeping taxpayers happy, not by harassing them, I want to hear people say that the tax administration has improved significantly, that paying taxes is no longer a burden, and that no one feels intimidated," " he said in a statement issued by his secretariat.

FM Dr. Wagle instructed tax administrators to expand the tax net through voluntary tax compliance rather than through coercion or fear.

"I do not want to hear that taxpayers are joining the tax system because they are frightened. Nor should there be a situation where anyone feels compelled to hide from paying taxes," the finance minister said.

He also encouraged officials to speak openly if they faced shortages of manpower, infrastructure, information technology, or any other resources required to strengthen tax administration. He made it clear that the government would spare no effort in rewarding officials who perform exceptionally well and contribute to increasing state revenue, read the statement from his secretariat.

"Taxpayers must be satisfied. Tax officials must facilitate compliance. Revenue targets must be achieved. We must meet the inland revenue target under the Rs 1.6 trillion revenue mission," instructed Dr. Wagle.

Describing this year's budget as a turning point for the economy, Dr. Wagle said it is set to change the country's economic direction. He added that the budget over the next four fiscal years would lay the foundation for the economy the government intends to build.

He directed the IRD's leadership to ensure the effective implementation of the tax relief schemes announced in the budget, make the taxpayer incentive programme a success, enhance taxpayer awareness, and promote the digitalisation of business transactions.

Stating that the ministry was making significant efforts to have Nepal removed from the Financial Action Task Force's grey list, he urged the tax administration to pay close attention to offences related to money laundering.

Dr. Wagle also said that the career development of tax officials would be determined primarily by their performance and contribution to the state. He urged employees not to seek transfers through political or personal influence.

Published in The Rising Nepal daily on 24 July 2026.         

Govt remains committed to addressing challenges in construction: PM

 Kathmandu, July 9 

 Prime Minister Balendra Shah on Thursday held a discussion with representatives of the construction industry on the prevailing challenges facing the sector, the promotion of the construction business, and the development of physical infrastructure.

During a meeting with office-bearers of the Federation of Contractors' Associations of Nepal (FCAN) at the Office of the Prime Minister and Council of Ministers, Prime Minister Shah stated that the construction sector is a vital pillar of the country's economic development, employment generation and infrastructure development.

He said the Government remains committed to addressing the practical challenges confronting the sector.

The Prime Minister emphasised that active and effective collaboration among all stakeholders is essential to ensure the construction industry remains dignified, transparent, accountable and results-oriented, while enabling development projects to be completed on schedule.

The meeting was attended by the Federation's president Nicholash Pandey, senior vice-president Mukesh Panta, general secretary Shivahari Ghimire, Bagmati Province vice-president Bal Krishna Thapa, and the Federation's former president and adviser Jayaram Lamichhane.

During the discussion, the representatives briefed Prime Minister Shah on the key challenges facing the construction sector, including delayed payments, contract extension issues, contract management, timely project implementation, price adjustment, banking constraints and investment-related concerns.

They also stressed the need to strengthen cooperation between the government and the private sector to revitalise the construction industry.

PM expressed concerns that engineers are not seen at the construction site and urged the FCAN representatives to have engineers even in the small projects, he said.

In a memorandum submitted to PM Shah, the FCAN said that Nepal’s construction industry, which directly and indirectly provides employment to more than 2 million people and accounts for nearly 80 per cent of government capital expenditure, is facing a severe crisis due to unprecedented increases in the prices of fuel, bitumen and construction materials.

It warned that supply chains have been disrupted, projects have stalled, and the broader economy has been negatively affected.

The contractors have urged the government to immediately address key issues, including price adjustment for construction contracts as guaranteed by the Public Procurement Act, extension of project deadlines affected by price hikes, shortages, natural disasters, political unrest and elections, and settlement of sick and delayed projects.

They also demanded that contractors not be blacklisted for delays caused by external factors such as global conflicts, pandemics and economic disruptions.

Likewise, the contractors also called for timely payment of outstanding bills, a transparent monthly payment system, easier access to construction materials, removal of double taxation, regulation of crusher industries, and scientific design and specifications for projects.

They argue that immediate government intervention is essential to revive construction activities, maintain employment and stimulate economic growth.

General Secretary of the FCAN, Shivahari Ghimire, said to The Rising Nepal that PM said that the government has accorded high priority and importance to infrastructure development and assured the construction entrepreneurs that problems and issues in the sector would be addressed at the earliest.

“Contractors are immensely impacted by the price rise in petroleum products due to the crisis in West Asia. We updated the PM about the challenges, such as price and time overrun, caused by the crisis and sought timely solutions from the government,” he said.

According to Ghimire, the PM directed the concerned agencies to solve the crisis to make the construction sector vibrant. 

Published in The Rising Nepal daily on 10 July 2026.        

Monetary Policy is positive and balanced: FNCCI, NICCI

 Kathmandu, July 8

The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has termed the monetary policy for the upcoming Fiscal Year 2026/27 as 'positive and balanced', and said it would help boost the confidence of the private sector.

"The policy seeks to maintain a balance between price stability, financial sector stability and higher economic growth at a time when the country's economy is gradually improving," the business body said about the policy unveiled by the Nepal Rastra Bank (NRB) on Tuesday.

It said the policy recognises the decisive role of the private sector in achieving the government's target of 7 per cent economic growth as announced in the budget for the next year.

FNCCI President Anjan Shrestha said the flexible policy measures aimed at expanding private sector investment, increasing production, creating employment and stimulating economic activities were appropriate.

According to the FNCCI, several issues that it had been raising for a long time had been addressed in the policy. These include measures to remove unlimited liabilities arising from personal guarantees, manage non-performing loans of sick industries and revive stressed loans.

It also welcomed provisions to determine share-backed lending limits based on institutional capacity and to facilitate lending for large electric vehicles used in public transportation.

However, FNCCI stressed that the upcoming directives should clearly address the restructuring and rescheduling of loans for small, medium and large businesses, as well as sector-specific lending.

Likewise, the decision to keep the policy rate, standing deposit facility rate, bank rate, cash reserve ratio, statutory liquidity ratio and standing liquidity facility unchanged would help maintain policy stability, read the statement.

"The NRB's projection of a strong external sector, supported by adequate foreign exchange reserves, remittance inflows, tourism income and growth in service exports, would help stimulate the domestic economy," said the FNCCI.

However, it maintained that the success of the monetary policy would depend on its effective implementation. It called for easier and affordable credit flow to industry, agriculture, tourism, energy, information technology, infrastructure, export-oriented industries and small and medium enterprises to achieve the 11 per cent credit growth target and utilise excess liquidity in the banking system.

It further called for a more flexible approach towards loan classification and loan-loss provisioning, a two-year relaxation of watch-list and blacklisting provisions.

Meanwhile, Nepal-India Chamber of Commerce & Industry (NICCI) appreciated the Monetary Policy as the continuation of a cautiously accommodative monetary policy aimed at supporting higher economic growth while maintaining macroeconomic stability.

It welcomed the decision to maintain policy rates, continue the existing Interest Rate Corridor, preserve adequate liquidity in the banking system and maintain exchange rate stability with the Indian Rupee. "These measures are expected to sustain business confidence and create a more predictable investment environment," NICCI said in a statement.

It said that although the banking system currently possesses ample liquidity and historically low lending rates, private sector credit expansion remains relatively subdued. This indicates that the principal constraints are no longer the availability or cost of finance, but rather investor confidence, policy predictability, project readiness, regulatory bottlenecks and the pace of implementation of economic reforms, read the statement. 

Published in The Rising Nepal daily on 9 July 2026.       

Govt begins efforts in good governance, reform

 Kathmandu, July 3

The government has completed its first 100 days in office, marking the beginning of efforts to implement its commitments to good governance, public sector reform, reducing corruption, recovering illicit assets, and strengthening the accountability of state institutions.

Under the leadership of Prime Minister Balendra Shah, the government has launched the implementation of its policy agenda, accompanied by a long-term vision aimed at achieving its good governance objectives.

In the budget for the Fiscal Year 2026/27, the government has introduced programmes focused on economic transformation. It has also initiated accelerated reforms to ensure economic stability while addressing the management of informal and unplanned settlements.

During its first 100 days, the government has implemented measures aimed at eliminating delays and discourteous treatment of service users in public offices, expediting the printing of passports and driving licences, and making public service delivery more citizen-centred.

Former treasurer and senior leader of the Rastriya Swatantra Party (RSP), Lima Adhikari, and political analyst Professor Meena Vaidya Malla described the government's initial performance as encouraging.

"The RSP has also successfully completed its general convention during this period. Within these 100 days, the government has taken significant action against corruption. I believe that the commitment demonstrated by both the government and the RSP, together with the practice of a new political culture, will help strengthen, enhance and consolidate Nepal's democracy," Professor Vaidya said.

Likewise, Adhikari stated that the government has developed a clear roadmap, particularly for improving public service delivery and promoting good governance. She noted that it has begun implementing measures to eliminate the difficulties and inconvenience that citizens have long faced in accessing public services.

She further claimed that the policy of zero tolerance towards corruption has been applied effectively from ward level through to the central government, and that the budget has helped restore confidence within the private sector.

"The budget is transformative. The work accomplished during these first 100 days has been outstanding. Reforms in the economic sector will revitalise the overall economy," said Adhikari.

However, Political analyst Professor Rajesh Gautam said that the government's approach should be aligned with public expectations. While there were grounds for optimism during the early stages following the formation of the government, he said the current situation suggests that it has not been able to uphold the aspirations of the people and democratic principles in an appropriate manner.

"There must be proper coordination between the government and the party leadership. At present, it appears as though the government is moving in one direction while the party leadership is moving in another. Such duality creates uncertainty in politics. It is needed to provide a long-term direction for the country's politics," said Professor Gautam.

He also emphasised that, in tackling corruption, the government should proceed systematically by gathering robust evidence before pursuing legal action.

"Those who have been arrested are subsequently being released by the courts. This indicates that the charge sheets have not been prepared with sufficient strength and supporting evidence," he said while adding that the government should not be driven by publicity.

Published in The Rising Nepal daily on 4 July 2026 (Originally written by Ashok Adhikari).       

Efforts Begin For Economic Takeoff

 

The first 100 days of any government are typical, as during this period the government tries to set its feet, creates indications for policy and structural reforms, and learns the nitty-gritties of governance. It is termed the 'Honeymoon Period' because the government has leverage of 'public doubt' and goodwill, less criticism from the media and less resistance and attacks from the opposition parties. It is the time the government or the ruling party sets the course for the future and reveals its priorities and assertiveness for reform. 

However, these 100 days are not enough to exhibit major transformation in policy, economy, or society. But the government, led by Prime Minister Balendra Shah with Dr. Swarnim Wagle in the driver's seat of the economy, has made ambitious attempts for governance, reforms, economic recovery, boosting private sector confidence, and digital transformation to implement long-term structural change. 

The government has set an ambition to build a Rs. 10 trillion economy by 2030. FM Dr. Wagle has said that rather than focusing solely on fiscal consolidation or immediate growth, the government has framed its economic agenda around expanding Nepal's productive capacity through energy generation, tourism, information and communication technology (ICT), agriculture, infrastructure development and institutional reform. With the announcement of '100 programmes for 100 days,' the government had clearly said that it had accorded priority to good governance, administrative reforms, economic growth, and private sector confidence. 

But although macroeconomic indicators have improved over the past year with sufficient foreign exchange reserves, satisfactory export growth, and enough liquidity in the financial system, the private sector is facing declining demand, credit growth is poor, and investment and business confidence is at the bottom. 

To reverse this scenario, the Ministry of Finance is operating in 'mission mode' and is replacing lengthy and cumbersome bureaucratic processes with swift decision-making and adoption of digital technology. Projects are being monitored digitally while clear performance indicators are set to strengthen institutional accountability. Administrative procedures are increasingly being moved online in an effort to reduce delays, improve transparency, and minimise opportunities for corruption. 

Instead of organising physical meetings and conferences to solicit suggestions on the government's policy and programmes and budget, the government launched a digital portal for the same so that all Nepalis living at home and abroad could equally participate in the policy making and budget formulation. 

Several outdated laws and regulations that have been obstructing the growth of the private sector, economy, and development were amended or repealed. Since the government implemented this policy reform as per the demand of the private sector, it is expected to boost the morale of the investors and businesspersons. The government has also decided to postpone Nepal's graduation to 'developing country' status from 'least developed country,' which was due in November 2026. The process will be delayed for three years until 2019, providing time for the government and private sector businesses to prepare for the upgrade. 

Enhancing transparency

Through the budget of the fiscal year 2026/27, the government increased the slab of personal income tax, which will give relief to the lower middle and middle classes. The salary of civil servants has been increased by 20 per cent. Tax rates for higher earners are also reduced. Digitalisation of tax administration and a provision that requires businesses with annual turnover exceeding Rs. 200 million to join the Central Invoice Monitoring System are expected to check revenue leakage. 

FM Dr. Wagle reduced customs duties on 273 types of raw materials to make sure that the tariff on industrial raw materials is one level lower than that on the finished goods. He also announced amendments to company law to facilitate the process of dissolving companies while ensuring clarity on issues such as conflicts of interest and disclosure of information.

The Ministry of Finance has launched an electronic pension verification system, benefiting over 350,000 pensioners and saving about Rs. 150 million through the elimination of bank commission and administrative costs. Similarly, the MoF has piloted a salary distribution every fifteen days. 

Likewise, in an effort to enhance fiscal discipline, fuel allowances for senior government officials have been reduced, and overtime allowances for the officials of the Nepal Oil Corporation are being checked with the implementation of shift-based working hours. 

Infrastructure reform

In infrastructure development, the government has given priority to complete the priority projects. National pride as well as the priority projects have received the increased attention of the finance minister, the home minister, and the concerned line ministries. Legal amendments have been made to facilitate environmental assessments and tree-felling approvals. The Public Procurement Act and its regulations have also been amended to streamline and shorten procurement procedures. The government has also ensured the stability in the tenure of project chiefs and other key personnel. Meanwhile, the Appropriation Act, 2082 and the Financial Procedures and Fiscal Responsibility Regulations, 2077, have been amended to delegate authority to line ministries to allocate funds within the capital budget. 

The government has allocated an adequate budget for the forthcoming fiscal year for the national pride projects, supported by a clear roadmap for their completion. Resources have been allocated, and legal as well as procedural simplifications have been introduced to ensure that these projects are completed within the stipulated timeframe.

Legal and institutional reforms have also sought to improve conditions for foreign direct investment, with greater emphasis placed on economic diplomacy and engagement with multinational companies. The restructuring of the Nepal Stock Exchange and reforms to capital market governance likewise signal an intention to strengthen domestic capital mobilisation. 

With a strong rise in remittance inflows, robust foreign exchange reserves, a current account surplus, and a strengthened balance of payments, the country is in greater macroeconomic stability. This has given both the government and private sector greater confidence to implement reforms and push forward the developments to achieve economic growth of 7 per cent and contain inflation below 6 per cent. 

Published in The Rising Nepal daily's supplement on 4 July 2026.       

Capital spending continues to challenge government

Gen Z protest, petroleum price hike blamed

 

Kathmandu, July 4

The current Fiscal Year 2025/26 witnessed disastrous moments with demonstrators burning down national heritages and private sector establishments during the Gen Z movement in September last year. Death of 76 people and political confusion caused a panic among the public while investors postponed or cancelled their business ventures. Economic prospects plummeted. Hopes for prosperity vanished.

However, despite doubts, fears and conspiracy theories, the country successfully held the general elections within the announced time and people felt the country has now been brought on track. Public opinion changed, so did the government.

The year saw three finance ministers – Bishnu Prasad Paudel, Rameshore Prasad Khanal and Dr. Swarnim Wagle. Paudel was the political architect of the CPN-UML, albeit without any experience or expertise in the sector, while Khanal was a technocrat with an expertise in economic affairs, and Dr. Wagle is an internationally known economist who had worked with the World Bank, UNDP and National Planning Commission of Nepal, among others.

Although Paudel was ousted by the movement within two months of this fiscal and the economy was managed by two senior economists – Khanal and Dr. Wagle, budget mobilization remained pathetic with capital spending remaining the lowest in the recent times.

According to the statistics from the Financial Comptroller General Office (FCGO), the government could mobilise only Rs. 146.7 billion of the Rs. 407.88 billion capital allocation by Thursday, July 2. This is just 35.97 per cent of the total allocation.

Economist Dr. Dilli Raj Khanal said that this is collective failure of the government and leaders. "It is disheartening to see the government fail to bring about programmes and measures to boost economic activities and morale of the investors and consumers," he said.

Dr. Khanal maintained that the aftermath of economic crisis demands both short-term and long-term measures to revitalise the economic and business activities which both the transition and current majority government failed to implement.

However, spending has significantly gone up recently, with the government mobilising Rs. 19.7 billion on Thursday and Rs. 8.7 billion on Wednesday. Even if the government continued this spending spree for the remaining days of the fiscal year, total spending is likely to remain around 80 per cent while the development expenditure could be lower than 45 per cent.

However, the Ministry of Finance (MoF) maintained that a few large payments to the contractors and other liabilities could increase this spending up to 50 per cent. For instance, development expenditure on Wednesday was Rs. 1.15 billion and on Thursday Rs. 1.48 billion.

Although, two weeks remain before the conclusion of this year, the government could disburse the payments only up to July 9, as provisioned by the Economic Procedures and Fiscal Accountability Act and bylaws. After that the payment systems like Financial Treasury Controllers Offices and online payment channels freeze.

 

A trend in failure

While the MoF officials cited Gen Z movement for the disturbances in budget mobilisation, statistics show that it is not the one-time failure but has become a trend. During the same period, with two weeks of the year remaining, in FY 2024/25, about 75 per cent budget was mobilised while the capital expenditure stood at 46.6 per cent (Rs. 164.15 billion of Rs. 352.35 billion).

But total capital expenditure reached 81 per cent by the end of the FY 2024/25 which supports the claims of the Finance Ministry that such spending can reach 50 per cent.

In 2023/24, Rs. 146.7 billion (48.57 per cent) of Rs. 302 billion could be mobilised during the corresponding period while such expenditure was 44.82 per cent (Rs. 170.5 billion of Rs. 380.38 billion). In 2020/21, the year when the COVID-19 hit hard the lives and economy, capital expenditure remained around 46 per cent during the same period.

Meanwhile, recurrent expenditures have remained identical (70 to 74 per cent) in the past five fiscal years.

Likewise, budget revision has also become a trend in the past several years with every finance minister downsizing their budget during the mid-term review. Finance Minister Khanal couldn't remain exception. He slashed the annual budget target to 85.96 per cent or Rs. 1688.3 billion from Rs. 1964.1 billion.

Minister Khanal had presented the unusual situation created by the Gen Z movement, and the Cabinet's decision to reprioritise projects, as well as austerity measures to reduce expenditures as the reasons for budget downsizing. The government also said that it had to manage funds for the general elections and relief to the families of those injured and killed in the protests from the existing framework. 

By mid-January this year, only 12 per cent of the budget earmarked for development works was utilised.

 

Reforms impact spending

The transitional government led by Prime Minister Sushila Karki suspended small projects worth Rs. 119.5 billion because they were unprepared and unproductive.

Then Energy Minister Kulman Ghishing scrapped 58 non-performing and sick construction contracts from 312 such projects.

FM Khanal said then that the government's priority was to enhance 'expenditure efficiency' and 'execution efficiency' in public finance management so the government wanted to reallocate resources to transformative and strategic projects. This reform move reduced the mobilisation of the fund and caused a brief panic in the construction industry.

Meanwhile, the soaring prices of petroleum products including diesel and bitumen, and steel forced the contractors to pause the construction of the public projects. According to the Federation of Contractors Association of Nepal (FCAN), petroleum products' price increase pushed the project cost by 30 to 40 per cent, making it impossible for the contractors to continue with the previously agreed amount.

Spokesperson of the MoF Amrit Lamsal said that the surging price of the petroleum products significantly impacted the development projects. "Several government offices including that of the local governments were damaged during the Gen Z movement which obstructed or delayed the implementation of development works," he said.

Similarly, during the period of the transition government, the focus of the entire government and its agencies was on holding the elections successfully, according to Lamsal. But he maintained that the authority given to the line ministries for budget transfer without coming to the Finance Ministry for approval couldn't prove effective due to the obstacles created by the soaring fuel prices.

Economists say that the entire mechanism for budget mobilisation needs an overhaul. Responding to this recommendation, FM Dr. Wagle had further simplified the budget disbursement process and said that from the first day of the FY 2026/27, line ministries can initiate the development works and they don't need additional approval from the Finance Ministry for it.

Revenue collection on track

The government revenue collection has hovered around 75-76 per cent, until July 2, this year and previous year. Targets for this is Rs. 1480 billion while it was Rs. 1419.3 billion for last year.

So far, Rs. 1128.2 billion revenue is collected which includes Rs. 1024.4 billion tax revenue and Rs. 103.8 billion non-tax revenue.

While revenue collection remained somewhat satisfactory, government could never meet the targets set for the grants. This year the achievement has remained at 11.87 per cent of Rs. 53 billion while it was 38.11 per cent (highest in the past five years) of Rs. 52.3 billion. In 2022 and 2023, realisation of the targets for grants remained below 10 per cent.

Meanwhile, the provincial governments have also failed to meet their revenue and expenditure targets. By mid-May 2026, seven provincial governments could spend Rs. 88.53 billion and mobilised revenue of Rs. 163.74 billion.

According to the statistics published by the Nepal Rastra Bank, the total resource mobilisation of provincial governments, by mid-May, including grants and revenue transferred from the federal government, amounted to Rs. 122.25 billlion, and province revenue and other receipts amounted to Rs. 41.42 billion.

The seven provinces' cumulative budget for this fiscal is Rs. 287 billion. 

Published in The Rising Nepal daily on 5 July 2026.       

Budget outlines series of business, investment reforms

Women entrepreneurs, startups get focus

 

Kathmandu, May 30

Through the budget of the next Fiscal Year 2026/27, the government has expressed its 'full commitment' to industrial innovation.

It has made a plan to invite the private sector to develop and operate industrial areas like Motipur and Nayurdhap in line with the policy of expanding high-quality industrial infrastructure.

In the Panchkhal Special Economic Zone (SEZ), priority will be given to women entrepreneurs. Further concessions will be offered on loan disbursements to women entrepreneurs. "We will make arrangements for a 'Special Economic Administration Zone' where all decisions regarding tax, customs, import, export and investment will be made under a single roof," said Finance Minister Dr. Swarnim Wagle while presenting the budget at the joint session of the Federal Parliament on Friday.

To enhance the competitiveness of productive industries, the government plans to review the demand charge for electricity and provide discounts on electricity tariffs. Industrialists will be able to mortgage structures built on land provided in industrial areas, SEZs, or on lease, for banking purposes.

A plan is also announced to encourage the expansion and growth of industries and businesses that have been unable to operate at full capacity due to lack of capital, by providing 'Business Revival Loans'.

Likewise, the government is set to implement the 'Investment Express' concept by introducing an automated route system within the next three months.

"We will make arrangements for integrated services covering everything from company and industry registration, financial services, tax system participation, and visa applications, including provisions for information access, compliance reporting, and risk-based auditing," read the budget.

A legal provision will be made so that projects approved by the Investment Board do not require further approval from other agencies. Investment visas will be provided for conducting research and studies related to investment in approved projects, and investment and profit repatriation will be facilitated by simplifying share transfer, tax clearance, asset valuation, loan repayment, dividend distribution, and liquidation processes.

 

Expansion of labour-intensive industry

To develop and expand labour-intensive industries with export potential, such as agro-processing, tourism services, and light manufacturing, model Employment-Linked Production Zones will be operated.

A sewage system with treatment plants will be operated in collaboration with the government and the private sector in industrial areas and corridors, using clean energy-based technologies.

Concessional loan facilities will be provided to replace traditional boilers in industrial establishments with electric boilers. An allocation of Rs. 220 million is made to convert 100 industries to electric or bio-briquette-based boilers.

Rs. 650 million is earmarked for industrial infrastructure development, and Rs. 500 million for the design, construction, and maintenance of industrial and mining access roads used by heavy vehicles, with special standards.

The budget also announced to establish a Mining and Minerals Authority for the comprehensive regulation and management of the extraction, production, supply, and use of mineral and construction materials.

"We will expedite the necessary processes for the commercial production of petroleum in Dailekh. We will proceed to reduce the Government of Nepal's share in the Dhaubadi Iron Industry and operate it under a public-private partnership model," said FM Dr. Wagle.

 

Customs duties lowered to seven tiers

The finance minister reduced customs duties on 273 types of raw materials, ensuring that the tariff on industrial raw materials is at least one level lower than that on finished goods. He also limited the existing eleven tiers of customs duties to just seven.

The budget also announced to draft, replace, or amend dozens of acts, regulations, procedures, and directives for investment promotion, economic reforms and smooth delivery of services. A Bill to amend related acts will be presented in Parliament to immediately repeal the 15 laws announced earlier.

Similarly, the government announced to amend company law to facilitate the process of dissolving companies, while ensuring clarity on issues such as conflicts of interest and disclosure of information.

It will enter into foreign investment protection and double taxation avoidance agreements with more countries. "We will amend the Insolvency Act, 2063, to resolve financial problems of consumers as well as micro, small, and medium-sized enterprises. To promote investment, we will draft a limited liability partnership law, which will encourage angel investment to be directed into venture capital and private equity funds," said Dr. Wagle.

 

Simplifying provisions to invest abroad

The government has announced plans to simplify the provisions allowing Nepali citizens to invest abroad. Through amendments to the Industrial Enterprises Act, a new provision will be introduced requiring industries only to notify the Department of Industry regarding matters such as capacity expansion, change of ownership, and capital increases.

Similarly, amendments to the Foreign Investment and Technology Transfer Act will remove the requirement for prior approval from Nepal Rastra Bank for the repatriation of investment, with notification to suffice. Convertible instruments, project-related funding, and other hybrid instruments will be included within the scope of foreign investment.

The requirement for prior approval in the automatic approval process for foreign investment will also be removed. Furthermore, procedures for sending service fees, royalties, and technology-related payments abroad are to be simplified.

Likewise, FM Dr. Wagle announced that legal provisions for the recovery of loans will be made. A law on the protection of intellectual property will be drafted shortly. By analysing past overall economic activities, arrangements will be made to provide credit based on the creditworthiness of individuals and businesses. A separate tribunal is to be established for the speedy resolution of commercial disputes, and the Conciliation Act will also be improved.

To ensure financial access for small and medium-sized industrialists, loans will be guaranteed through a 'first loss recovery' mechanism.

Dr. Wagle also announced that the start-up operating system will be strengthened by tailoring start-ups to identification, skills, market access, and financial inclusion, through profit-linked tax concessions, preferential access to public procurement, digital registration, and regulatory facilitation.

Published in The Rising Nepal daily on 31 May 2026.   

Finance Minister Dr. Wagle announces Rs. 2124 bn budget

Economic growth target 7%, Inflation to be contained at 6%

 

Kathmandu, May 29

With an aspiration to achieve 7 per cent economic growth, Finance Minister Dr. Swarnim Wagle has announced a budget of Rs. 2124.34 billion for the next Fiscal Yeat 2026/27.

He has earmarked Rs. 1270.58 billion for recurrent expenditure, Rs. 431.10 billion for capital expenditure and Rs. 422.64 billion for financial arrangements. These allocations make up 59.8 per cent, 20.3 per cent and 19.9 per cent in the total budget, respectively.

"This expenditure estimate is 25.2 per cent higher than the revised estimate of the current FY 2025/26," FM Dr. Wagle said while presenting the budget at the joint session of the Federal Parliament on Friday evening.

During the half-yearly review of the budget, then finance minister Rameshore Prasad Khanal had slashed the size of budget by 14.04 per cent to Rs. 1688.32 billion.

For this year, then finance minister Bishnu Prasad Paudel had unveiled a budget of Rs. 1964.11 billion with Rs. 1180.98 billion (60.1 per cent) allocated to recurrent, Rs. 407.89 billion (20.8 per cent) to capital and Rs. 375.24 billion (19.1 per cent) to financing management. Last year's budget size was 18.2 per cent larger than the revised estimates.

Earlier, in FY 2024/25, the budget size was Rs. 1860.40 billion. 

 

A deficit of Rs. 657 billion

Next year's budget will have a deficit of Rs. 657.29 billion.

According to Finance Minister Dr. Wagle, the government has set a revenue target of Rs. 1405.31 billion for the next year. The remaining budget will be covered with Rs. 61.74 billion from foreign grants, Rs. 247.28 billion from foreign loans and Rs. 410 billion from domestic borrowing. "As Rs. 245.89 billion in principal of domestic loans will be repaid in the upcoming fiscal year, net domestic borrowing will amount to only Rs. 164.11 billion," read the budget document.

As per the suggestions of the National Natural Resources and Fiscal Commission, Dr. Wagle has made arrangements to provide fiscal equalisation grants of Rs. 61.50 billion to the provinces and Rs. 90.20 billion to local governments for the upcoming year.

He said that complementary grants of Rs. 4.60 billion will be provided to provinces and Rs. 893 billion to local governments for implementing infrastructure projects. Likewise, special grants of Rs. 3.82 billion has been earmarked for provinces and Rs. 9.40 billion for local governments. For the implementation of federal government projects, the budget has allocated conditional grants of Rs. 39.72 billion to provinces and Rs. 206.8 billion to local governments.

Dr. Wagle estimated that a total of Rs. 175 billion will be transferred to provinces and local governments through revenue sharing. In the upcoming fiscal year, it is projected that over Rs. 600 billion will be mobilised in provinces and local governments through revenue sharing (including royalties) and fiscal transfers.

"As Finance Minister, I have taken this on not merely as a constitutional formality, but as a duty to transform the character of the state, the culture of governance, and the nature of the economy," said the Finance Minister, adding that the budget will serve as a policy document to meet expectations regarding production-oriented economy, international prestige and technology-driven change.

According to him, the need of the hour is to put an end to policy confusion, delays, institutional capture, and the exploitation of state resources, and to build a results-oriented governance system.

He said that the government is committed to launching an aggressive series of operational improvements to transform the pace and momentum of capital expenditure.

It will work in 'mission mode' to complete projects within the specified cost and on time, by improving procurement processes, ensuring flexibility in resource management (including fund reallocation), mobilising alternative finance, and guaranteeing stability in the tenure of project heads.

Dr. Wagle announced to formulate a sunset law relating to development projects within the current fiscal year and present it to the parliament. "We will make arrangements to track mobilisation advances, ensuring such funds are spent only on the relevant project. An initial pipeline of infrastructure projects that can be built under the hybrid annuity model will be ready within three months," he said.

The budget also pledged to address the difficulties faced by construction contractors as a result of price hikes in fuel, bitumen and other construction materials caused by the conflict in the Middle East.

FM Dr. Wagle has exhibited ‘cautions’ to focus the capital expenditure to a few priority sectors and large infrastructure projects that will promote growth and further development. Small projects and piecemeal allocations have been discouraged in the budget.

 

Salaries raised

FM Dr. Wagle increased the starting salary of government employees by 10 per cent while maintaining the existing dearness allowance. Likewise, to introduce a performance-based pay system, he has made a provision for a monthly incentive allowance equivalent to 10 per cent of the new salary scale. This will result in a net increase of approximately 21 per cent in the current remuneration, raising the minimum remuneration (including grade) to around Rs. 40,000, and beyond Rs. 100,000 at the upper level.

The new salary scale will come into effect from mid-July, beginning of the new FY 2026/27.

Stating that the salaries of civil servants have not been increased for the past four years, during which time the consumer price index-based inflation has risen by 17.3 per cent, Dr. Wagle increased the salary.

 

Execution challenges

Meanwhile, the budget that is augmented to about one-third of the Gross Domestic Product (GDP) of the country which is expected to reach Rs. 6,609 billion by the end of this fiscal (mid-July this year) comes with mobilisation challenges. The leaders of the opposition parties termed the budget 'ambitious' and pointed to the challenges of its implementation.

Likewise, the government has targeted to contain inflation at a maximum of 6 per cent.

Former finance minister Janardan Sharma said that the budget is positive and optimistic and welcomed the policy and legal reforms announced. In his social media post, he said that the focus on digital development and priority to Sudurpaschim, Karnali and Madhes provinces as well as education and health are highly positive steps.

However, former minister and CPN-UML Lawmaker Padma Kumari Aryal said that the budget has inherent execution challenges. Talking to media persons after the budget announcement, she said that the programmes announced through the budget lack sufficient allocation and execution assurance.

Likewise, Rastriya Prajatantra Party's lawmaker Khusbu Oli also termed the budget ambitious and said it lacked specific plans and programmes to increase the income of people.

 

 

'Growth poles and Quads'

FM Dr. Wagle announced to implement an integrated plan of policy and physical infrastructure to develop such areas as 'growth poles and quads'. This is said to be achieved by increasing investment in the comprehensive regional development of rural and peri-urban areas that have the best potential for economic growth.

Taking the 122,000-hectare command area to be irrigated by the Sunkoshi Marin Diversion as a base, and completing the remaining work on the Postal and East-West Highways, a Mid-Madhesh Quadrangle for agriculture and industry is planned.

Similarly, arrangements will be made to promote medicinal herbs, hydropower, tourism and mining-related activities in the 'Karnali Quadrangle' comprising the Mid-Hill (Pushpalal) Highway, Karnali Highway, Bheri Corridor, and the route from Rara via Jumla to Phoksundo.

The budget announced to complete Butwal-Narayangadh and Mugling-Damauli-Pokhara sections of the East-West Highway expeditiously. "We will begin the international-level transformation of Siddhartha Highway and develop the origin area of the Kaligandaki civilisation into a 'Gandaki Quadrangle' focused on pilgrimage and clean enterprises and businesses," read the budget.

It announced to develop the 'Shaligram Path' by integrating Trivenidham, Devghat, Rurukshetra (Ridi), Kagbeni, Muktinath and Damodar Kunda.

Likewise, a 'Nirvana Path' based on the Lumbini-Muktinath religious and cultural route, integrating meditation, contemplation, yoga, Buddhist and Vedic philosophy, and the Himalayan cultural experiences of Manang, Mustang and Myagdi will be promoted. The government aims to connect the Mid-Hill Highway with northern transit and trade destinations such as Olangchungola, Kimathanka, Tatopani, Rasuwagadhi, Korala and Hilsa.

It also plans for the Koshi Corridor, that will cover the area from Koshi Tappu to Kanchenjunga, focusing on biodiversity conservation and clean energy development.

In the far-west region, plans are announced for the development of a distinctive 'touristic quadrangle', encompassing Ramaroshan, Khaptad, Badimalika, Shaileshwari, Ugratara and Mallikarjun.

 

Published in The Rising Nepal daily on 30 May 2026.   

Over 99% people have access to electricity

Kathmandu, May 27

Access to electricity in Nepal has reached 99.1 per cent of the population by mid-March 2026.

According to the Economic Survey 2025/26 presented at the Parliament by Finance Minister Dr. Swarnim Wagle, total installed electricity capacity stands at 4,105 megawatts, including 3,798 MW hydropower and 142 MW solar energy.

Likewise, electricity generated by the Alternative Energy Promotion Centre is 106.24 MW, thermal energy (thermal plant) is 53.4 MW, and electricity co-generated through the sugar mill co-production method is 6.0 MW.

In the first eight months of the current Fiscal Year 2025/26, about 2,918 GWh of electricity was exported to India while 590 GWh of electricity was imported.

Last year, Nepal electricity export was 2,332 GWh, and import stood at 1,712 GWh.

It is estimated that an additional 666 MW of electricity will be generated from the construction of various projects by mid-July 2026. It will bring Nepal's electricity capacity to 4,626 MW.

“With the increased use of electricity, the consumption of petroleum products has slightly decreased. By mid-March of this fiscal year, imports of petrol and diesel decreased by 10.0 per cent and 9.9 per cent, respectively, compared to the corresponding period of the previous year,” noted the survey.

85^th in SDG ranking

According to the survey, in 2025, Nepal ranked 85^th among 167 nations by achieving a score of 68.58 on the Sustainable Development Goals Index. In Nepal's context, the ‘spillover score’ related to the SDGs is 94.85.

To achieve the SDGs, Nepal needs to make an annual average additional investment of 755 billion during the remaining period (about five years).

By mid-March, the number of beneficiaries receiving social security allowances had reached 3.6 million which includes 46.14 per cent senior citizens above 70 years of age.

Likewise, in the contribution-based Social Security Fund, 2.85 million workers have been registered. But more than three-quarters of these are Nepali migrant workers.

The government has collected the details of 21 million citizens for National Identity Cards, while only 4.03 million cards have been distributed.

Social indicators improve

The report maintained that social sectors indicators are showing positive improvements, with absolute poverty having dropped to 20.27 per cent and multidimensional poverty to 17.4 per cent, and the Gender Development Index standing at 0.885.

Nepal's Human Development Index (HDI) stands at 0.622. The average life expectancy of Nepalis has reached 71.3 years. The youth (15-24 years) literacy rate is 94.2 per cent.

The number of government health institutions has reached 8,976. The maternal mortality rate per 100,000 live births has dropped to 151, the infant mortality rate to 27 per 1,000 live births, and the under-five child mortality rate to 31.

The health insurance programme has expanded to all local levels. Up to mid-March, the number of citizens enrolled in this programme is more than 2.14 million.

Access to basic drinking water has reached 97.0 per cent of the population, but access to safe drinking water is limited to only 29.0 per cent.

Similarly, in the academic session 2025, the net enrollment rate at the basic level (grades 1-8) is 97.8 per cent, and secondary level (grades 9-12) 51.6 per cent. In terms of net enrollment rates, the Gender Parity Index is 1.02 per cent for the basic level and 0.9 for the secondary level.

Likewise, irrigation facilities are expanded to 44.6 per cent of agricultural land and 62.6 per cent of irrigable land. Now, forest covers 46.08 per cent of the total land area of Nepal while the global ratio is 32.0 per cent of the total land area.

Meanwhile, the number of members associated with a total of 32,325 cooperative societies reached 11 million. Those cooperatives are expected to mobilse savings of Rs. 1,029 billion.

Rs. 625 billion foreign investment approved

The government has approved investments worth Rs. 492 billion by mid-March, consisting of Rs. 389.74 billion from the Department of Industries and Rs. 02.26 billion from the Investment Board Nepal. Along with this, total approved investment in the industrial sector has reached Rs. 5444.06 billion.

Foreign investment worth Rs. 625.58 billion has been approved at the Department of Industries for a total of 7,951 projects. Among the approved foreign investments, the highest is in service industries at 28.3 per cent, and the lowest is in mineral industries at 1.3 per cent.

The number of registered companies reached 369,646, of which private limited companies are 97.5 per cent, while other companies comprise 2.5 per cent.

As public investment in the physical infrastructure sector increases gradually, the density of blacktopped roads built by the federal government has reached 138.7 meters per square km. A total of 104,906 km of roads have been expanded across the nation.

The report also mentioned that financial access is expanding. The number of deposit accounts in banks and financial institutions reached 620.06 million, while the number of loan accounts reached 2.04 million. Mobile banking users reached 29.4, while internet banking users reached 2.37 million.

For this year, the National Accounts Office has estimated the growth rate of 3.85 per cent while the agricultural and non-agricultural sectors are estimated to contribute 24.0 perc ent and 76.0 per cent respectively. With this, the Gross Domestic Product of the current fiscal year is estimated to be Rs. 6600.09 billion.

The survey also noted that the share of consumption in Nepal's economy remains high. The share of consumption is estimated to be 90.3 per cent this year. Within total consumption, the shares of the private sector, government sector, and non-governmental sector are estimated to be 91.26 per cent, 6.62 per cent, and 2.12 per cent, respectively.

Published in The Rising Nepal daily on 28 May 2026.