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The Rastriya Swatantra Party (RSP)-led government has presented a national budget of Rs 2.124trn for the fiscal year 2026/27. The fiscal plan allocates 51.08 percent to recurrent expenditure, 29.28 percent to capital expenditure, and 19.67 percent to financing. Compared to the previous fiscal year, the budget has increased by 7.03 percent, reflecting a blend of ambition and caution.

Prepared in line with the RSP's citizen contract, its “100 Points Governance Improvement” agenda, and the party’s position paper, the budget has drawn mixed reactions. While the position paper was widely praised for its intellectual rigor, the budget itself has received both support and criticism.

Finance Minister Swarnim Wagle’s consultations with former finance ministers appear to have encouraged several bold policy measures, which many view as an attempt to address Nepal’s deep-rooted structural weaknesses. Yet concerns have also emerged. Sapana Aryal, a development practitioner and homemaker, criticized the tax imposed on electricity consumption above 50 units, arguing that it discourages energy use, raises household bills, and undermines affordability. She noted that the Nepal Electricity Authority's service charges often finance staff allowances and facilities rather than improvements in power distribution, thereby penalizing consumers and discouraging productive energy use.

Critics have also pointed to inconsistencies in public investment priorities, noting that expected returns in the social, economic, environmental, and governance sectors have not been clearly articulated. The government's target of achieving seven percent GDP growth has been described as unrealistic. Although total expenditure has risen by 8.16 percent to Rs 1.602trn, ambitious commitments to technology and infrastructure continue to face challenges related to revenue generation, project execution, and policy credibility. Rising costs of education, healthcare, and essential consumer goods have also not been adequately addressed. While the 21 percent salary increase for government employees has been welcomed, concerns remain about its potential inflationary impact. Agricultural incentives have likewise been criticized as impractical, with stakeholders calling instead for interest subsidies and stronger financing mechanisms for small and medium enterprises.

Strong positions

The budget presents a bold vision of future-oriented reforms, signaling a shift toward a knowledge-based economy. Technology incentives include a 50 percent tax exemption on IT service exports and a full exemption on sweat equity for technology professionals, measures expected to energize Nepal’s growing IT sector. Equally forward-looking is the proposed establishment of Nepal’s first Sovereign AI Compute Center in Kathmandu, leveraging surplus hydropower to support advanced AI services.

The budget also seeks to strengthen the startup ecosystem by formalizing remote work arrangements and allowing outbound investments. On infrastructure, capital expenditure has increased by 71.5 percent to Rs 431.1bn, with Rs 70bn allocated for transmission lines and substations to support expanded electricity generation. Agriculture receives support through fertilizer subsidies and irrigation projects aimed at addressing supply-side constraints.

For the middle class, relief measures include raising the personal income tax exemption threshold to Rs 1m and granting government employees a 21 percent salary increase after a four-year freeze. These measures are expected to stimulate consumption, reduce incentives for corruption, and reinforce the government's vision of “more governance, less government.” The budget also emphasizes human capital development, allocating Rs 218bn to education and Rs 101bn to health, reaffirming social development as a national priority.

Weak positions

Despite its ambitions, the budget faces significant weaknesses. The most pressing challenge is revenue generation. Even before the budget announcement, Wagle acknowledged a gap of approximately Rs 150bn between projected revenue of Rs 1.18trn and mandatory expenditures of Rs 1.33trn. Tax reductions are likely to widen this gap further.

The budget relies heavily on borrowing, with nearly 31 percent of total resources expected to come from domestic and foreign debt, raising concerns about long-term fiscal sustainability. Equally troubling is Nepal's poor record of capital expenditure absorption.

Ambitious spending plans have frequently remained on paper because of chronic implementation failures. In the fiscal year 2025/26, for example, the capital budget was revised downward from Rs 407.88bn to Rs 243.3bn due to weak implementation. Without substantial improvements in project management, procurement, and execution capacity, the 71.5 percent increase in capital allocation may not translate into tangible infrastructure outcomes.

The budget also rests on highly optimistic growth assumptions. A seven percent GDP growth target is nearly double the estimated 3.85 percent growth rate for the current fiscal year and significantly exceeds Nepal’s decade-long average of 4.2 percent. This optimism contrasts sharply with structural weaknesses such as premature deindustrialization, heavy dependence on remittances, and a trade imbalance in which exports cover only 14.8 percent of imports. These vulnerabilities cast doubt on the country’s ability to achieve robust economic growth or graduate from Least Developed Country (LDC) status on a strong foundation.

SDG dimensions

The budget attempts to align with the Sustainable Development Goals (SDGs), allocating 8.82 percent to poverty reduction, 3.26 percent to zero hunger, 2.27 percent to health, 2.96 percent to education, 1.21 percent to clean water and sanitation, 3.3 percent to clean energy, 3.33 percent to decent work, 8.85 percent to innovation and infrastructure, 6.69 percent to sustainable cities, and only 0.51 percent to climate change adaptation.

This distribution reveals troubling inconsistencies. Despite Nepal’s acute vulnerability to floods, landslides, heat waves, and other climate-related disasters, climate adaptation receives minimal investment. Tourism, agriculture, and forestry, sectors with significant employment potential, also require greater attention, particularly as the country experiences large-scale outmigration of its workforce.

Federalism

The budget provides only limited insight into programs designed to strengthen federalism. Yet federalism is not merely a fiscal arrangement; it is a people-centered governance system that must be aligned with broader political economy dynamics. Grants and fiscal transfers alone cannot ensure effective federalism. Efficient use of public investment and the development of local economic opportunities are equally important.

The budget remains naïve in its treatment of federalism, overlooking Nepal’s inability to retreat from its federal experiment. A robust approach would analyze federalism through political economy and institutional performance. Effective federalism fosters decentralized governance, empowers citizens, promotes innovation, and circumvents bureaucratic bottlenecks. Without effective federalism, the seven percent GDP growth target is unattainable.

In this regard, the budget appears somewhat naïve, overlooking the reality that Nepal cannot retreat from its federal experiment. A stronger approach would assess federalism through the lens of political economy and institutional performance. Effective federalism can foster decentralized governance, empower citizens, encourage innovation, and reduce bureaucratic bottlenecks. Without strengthening federal institutions and local capacities, the government's seven percent GDP growth target is unlikely to be achieved.

Conclusion

This budget is best understood as a high-risk, high-reward policy document. Although opposition parties have raised objections, much of their criticism appears driven by political positioning rather than substantive policy analysis.

Overall, the budget is ambitious and reform-oriented, though not without limitations. It seeks to break from past practices through bold reforms, expanded capital spending, and transformative incentives. If the RSP-led government can effectively absorb the capital budget and successfully implement its technology agenda, Nepal could accelerate economic growth and move closer to becoming a knowledge-based economy.

However, historical weaknesses continue to outweigh the strengths. Nepal’s poor record in revenue mobilization and capital expenditure absorption, combined with highly ambitious targets, risks leaving the country caught between aspiration and reality. Wagle could have more aggressively explored financing options through strategic negotiations with bilateral and multilateral institutions, including restructuring principal and interest payment obligations over a five-year horizon. Such measures might have freed resources for urgently needed capital investments while reducing dependence on additional borrowing.

The budget is thoughtfully prepared, particularly considering the limited time available after the formation of the government. Yet its ultimate success will depend on implementation.

In sum, the fiscal year 2026/27 budget embodies ambition and reformist intent, but its credibility rests on execution. Without effective delivery, it risks becoming another well-intentioned experiment constrained by fiscal realities rather than a transformative pathway toward sustainable growth. This budget demonstrates both courage and optimism in pursuing institutional reform and long-term development. It signals the government’s willingness to confront entrenched weaknesses, but the true test lies in translating fiscal ambition into tangible outcomes.

It is human nature to explore and overcome the challenges presented by nature: from diving into the deepest oceans to climbing the world’s highest peaks. As Nepal consists of eight of the world’s ten tallest mountains, we have witnessed countless mountaineering expeditions, records, and valiant attempts.

The 2026 spring climbing season was no exception. This year, the Himalayas once again became the stage for remarkable feats of endurance and determination, as several climbers broke historic records. Initially, this climbing season was delayed due to the risk posed by a massive serac above the Khumbu Icefall, which hung over the route to the summit, delaying the Sagarmatha expedition by around two weeks.

Despite the difficult start, this season soon transformed into one of the most eventful climbing seasons. The government issued 494 permits to climb Sagarmatha this year, breaking the all time high of 479 permits in 2023. Due to the pushback the climbing society faced due to the serac in early climbing seasons, the push for the summit intensified during the latter half (especially during mid-May). This caused an unprecedented 274 climbers summiting Sagarmatha from Nepali side in a single day. According to the Guinness Book of World Records, the highest number of Sagarmatha ascents in a single day was 354 on 23 May 2019: 223 from the Nepal side and 113 from the Tibet side. Since the Chinese authorities have closed their route this year, this was the highest summits from a single route ever.

These records have caused a problem of their own. It has raised concerns regarding the overcrowding in high altitude. “It was very crowded this year compared to last year. The authorities need to control this number,” Kami Rita Sherpa told reporters at Kathmandu airport after returning from his summit. After the death toll this season increased to five, Kenton Cool, who summited 20 times—the highest non-Sherpa assent—told Reuters, “It is the operators who should be more diligent with who they ​allow to be with the team (of guides) that goes to the summit. People should not die on Sagarmatha ​if they have good ​enough experience.”

Yet despite concerns surrounding overcrowding and safety, the 2026 season also stood out for a series of historic achievements by Nepali climbers. Kami Rita Sherpa extended his own world record for the most Everest summits by climbing Sagarmatha once again this season, bringing his total to 32 ascents. Closely following him is Pasang Dawa Sherpa, who is currently on 31 summits after he summited twice this season. 

Lhakpa Sherpa also broke her own record, achieving her 11th Sagarmatha summit (the highest number of ascents by a woman). “These records show the strength of Nepali Sherpas in the Himalayas,” explained Utsav Pathak, the managing director of Himalayan Mountaineering.

Beyond individual climbing records, the 2026 Everest season also highlighted Nepal’s representation through national institutions and public service personnel. 

In a milestone for mountaineering and diplomacy, US Embassy Nepal’s Public Affairs Chief Mike Harker summited Sagarmatha on May 20, becoming the first serving American Foreign Service Officer to scale Mt Everest.

Just the previous year, Nepal also witnessed a historic achievement from its security forces. According to the Nepal Police spokesperson DIG Abi Narayan Kafle, Kunjang Chhopel Sherpa became the first female police officer to summit Sagarmatha on 19 May 2025. At the summit, she hoisted banners with the national flag of Nepal, Nepal Police, and messages against gender based violence.

Representing Nepal Police, Senior Sub-Inspector Purushottam Nepali had previously climbed the Sagarmatha in 2023, being the first male police officer to summit Sagarmatha. Similarly, the Nepali Army has played a major role in mountaineering expeditions over the decades. 

According to the Nepali Army Spokesperson Brigadier General Raja Ram Basnet, then Warrant Officer 2 Padam Bahadur Tamang became the first enlisted personnel from the institution to summit Sagarmatha in 1988, later retiring with the rank of Major. Among officers, Captain Sunil Singh Rathore became the first to successfully climb Sagarmatha in 2003, and currently serves as a Brigadier General.

“We generally view mountaineering as a matter of national pride, International recognition and our utmost discipline,” the Army Spokesperson stated. Beyond Sagarmatha expeditions, the institution has contributed through high-altitude rescue operations, military-to-military joint expeditions promoting military diplomacy, and providing security during the 2008 Olympic torch ascent to Sagarmatha. The Army has also actively participated in the “Safa Himal Campaign” from 2019 to 2024, collecting over 108 tons of biodegradable and non-biodegradable waste from the mountains.

As the 2026 climbing season comes to an end, Sagarmatha has once again proved why it remains the symbol of human endurance and ambition. This season witnessed countless records along with institutional achievements. However, along with these accomplishments, concerns regarding overcrowding and safety were also highlighted, which need to be solved for sustained mountaineering.

Prime Minister Balendra Shah held a joint courtesy meeting on April 8 with the ambassadors and chargés d’affaires of 17 countries. Distinct from the traditional practice of prioritizing separate courtesy meetings with ambassadors, Shah’s approach signaled a fresh beginning in Nepal government’s handling of foreign relations. Although it was only an initial step, comments and statements from foreign policy experts in local print and electronic media suggested that the government was preparing for a broader shift in its diplomatic approach as well.

Local media described the move as Shah’s attempt to reset Nepal’s diplomatic posture, distinct from years of diplomacy heavily influenced by realpolitik. His joint meeting with foreign diplomats appeared to signal a more conscious and state-driven foreign policy. Even if symbolic, the gesture hinted at what could be taking shape in Nepal’s foreign policy under the new government.

Furthermore, Prime Minister Shah’s decision not to meet US Assistant Secretary of State Samir Paul Kapur and US Special Envoy for South and Central Asia Sergio Gor during their visits to Kathmandu in April and early May—as well as his refusal to grant an appointment to India’s Foreign Secretary Vikram Misri, who ultimately put off his Nepal visit— reinforced the perception that the government was emphasizing process, protocol, and institutional procedure. It also appeared to reflect an attempt to restore a more structured diplomatic culture.

During his direct rule from February 2005 to April 2006, King Gyanendra Shah had also demonstrated a strong consciousness of protocol and institutional hierarchy. At the time, governing meetings and interactions with even high-profile foreign envoys strictly through protocol was often interpreted as a display of rigidity or grandeur.

Typically, a gentle reminder to any new government is that navigating foreign relations requires a different level of statesmanship. Whether under direct rule or democratic governments, Nepal’s leadership has often lacked not only long-term vision but also the statesmanship needed to translate vision into reality through sustained dialogue, engagement, and strategic diplomacy.

For Nepal, nestled within the world’s highest mountains, the idea of Shangri-La in foreign relations extends beyond its literal meaning. It signifies building meaningful bilateral and multilateral relations through dense and continuous dialogue, with the ultimate goal of ensuring the prosperity of the people and the political security of the state. Having observed the intricacies of diplomacy and foreign relations for more than three decades, the ideal of a Shangri-La in Nepal’s foreign policy may appear difficult, but it remains within sight. Countries like Singapore offer examples worth studying.

A closer look at Nepal’s history reveals a recurring pattern of rulers distancing themselves from others through anger, rigidity, or political obstinacy. The more regressive the leadership, the more governance often drifted toward stubbornness both in domestic political rivalries and in relations with neighboring countries. While such assertiveness occasionally appealed to sections of the public, it also caused suffering, humiliation, and instability for the people.

Nepalis have repeatedly borne the consequences of rulers’ obstinacy in governance and diplomacy, especially in managing internal rivalries and external relations. Yet diplomacy itself remains inherently complex. Countries are often overwhelmed when trying to interpret the deliberately abstruse language of foreign relations, particularly when dealing with powerful nations. The complexity becomes even more visible when smaller states engage with major global powers.

For Nepal, the pursuit of ideal bilateral relations is particularly challenging. Diplomatic engagement often begins with unresolved issues, competing interests, and enduring uncertainties. The moment a country steps into the realm of diplomacy, those challenges become evident. A deeper examination of Nepal’s foreign policies and diplomatic practices over the past seven decades reveals both recurring patterns and the structural challenges that continue to shape the country’s external relations.

Cautious to guarded optimism

Many previous governments demonstrated a disconnect between foreign policy and Nepal’s broader national vision of ensuring security and economic prosperity. Diplomacy was often reactive, shaped more by immediate political circumstances than by long-term strategic planning.

However, in a noticeable departure from the past, the current government has shown signs of adopting a more pragmatic approach in governance, including foreign affairs. A degree of cautious optimism is visible in its diplomatic posture. Prime Minister Shah’s joint meeting with diplomats from 17 embassies, along with his decisions regarding senior envoys from key partners such as India and the United States, has been interpreted by some experts as a sign of confidence combined with preparedness for challenges.

Admittedly, it is too early to define the full scope of this government’s foreign policy priorities based solely on a single joint meeting or a more protocol-driven approach. Nevertheless, these early actions suggest a desire to move away from past practices and adopt a more structured and self-conscious diplomatic framework in dealing with neighboring and partner countries.

Still, there is a fine distinction between cautious optimism and guarded optimism, and in diplomacy even that fine line matters. Guarded optimism requires realistic planning rather than blind confidence in one’s own policy positions. In the context of changing regional and global politics, major diplomatic breakthroughs often occur only when states recognize that old frameworks and assumptions are no longer sufficient to explain new realities.

Prime Minister Shah’s government must therefore remain prepared for challenges, especially once deeper bilateral engagement with Nepal’s two immediate neighbors intensifies. Previous governments have already left behind a stockpile of unresolved bilateral issues that this administration will eventually need to confront. Acknowledging this reality means recognizing that even when conditions appear promising, setbacks remain possible. Preparedness and flexibility are therefore essential.

At the same time, Nepal’s neighbors as well as countries like the United States will have their own expectations from the new government, often shaped by conflicting strategic interests. Yet conflicting interests are neither unusual nor unmanageable in diplomacy. Effective statesmanship lies not in amplifying conflict, but in identifying areas of mutual interest and shared benefit.

Successful diplomacy depends on the astute management of convergence rather than confrontation. It requires recognizing common ground and building reciprocal relationships where all parties feel they gain something meaningful. In that sense, what Nepal needs today is a form of guarded optimism grounded in realism, strategic clarity, and diplomatic maturity. For Nepalis, this means remaining hopeful about positive outcomes while also staying realistic and prepared for potential challenges ahead.

One of the strangest things about modern childhood is how little uninterrupted time children now have to simply be children. Almost every hour is spoken for: school, homework, tuition classes, extracurriculars, structured play, even rest carefully managed between productivity and guilt. Somewhere along the way, unstructured time itself began to feel unnecessary, even wasteful.

And yet, some of the most important parts of childhood happen outside structure entirely. They happen in boredom. In wandering curiosity. In slow afternoons, long conversations, abandoned hobbies rediscovered weeks later, and the freedom to explore interests without the pressure of performance. It is during these stretches of unhurried time that children often begin to understand themselves beyond grades, routines, and expectations.

Which is why the growing discussion around shortening school holidays in Nepal feels so deeply concerning. Nepal’s recent move to a two-day weekend for schools was a long overdue and encouraging shift. What now worries me is the instinct to compensate for reduced school days by trimming already limited holiday periods. It may appear administratively practical. But educationally and developmentally, it raises deeper questions about what we are prioritizing.

Nepal’s schools currently operate for approximately 220 school days a year, comparable to Japan and South Korea, two of the most academically intensive systems in the world. Yet even those systems provide uninterrupted breaks of five to six weeks.

In Nepal, holidays are far more fragmented. End of session breaks, winter breaks, summer breaks and festive holidays rarely extend beyond 2-3 weeks at a time. Altogether, Nepali students receive approximately 7-9 weeks of holidays across the entire year, but very few uninterrupted stretches where time truly slows down.

It is also worth noting that within living memory, the structure of the school year in Nepal was different. For many who went to school a generation ago, long breaks were significantly more extended, often 4-8 weeks at a time, particularly during winter, summer or between academic cycles. Those were periods that allowed for deeper rest, family time, travel and unstructured learning outside formal schooling. Over time, these longer pauses have gradually been compressed into shorter, more fragmented breaks.

That is already significantly lower than many high-performing education systems globally. A 2024 data from the OECD, the Organization for Economic Co-operation and Development, which tracks education systems across 38 countries, shows that the average annual school vacation across OECD countries is approximately 14 weeks. Italy provides nearly 17 weeks, France around 16 weeks, the United States 10 to 12 weeks of summer break alone, and the United Kingdom around 13 weeks. India, depending on the state, typically offers 10 to 12 weeks annually. And yet, despite decades of evidence, we continue to equate more instructional hours with better learning.

The OECD clearly states that the quantity of instructional time has little direct relationship with student performance. The quality of learning matters far more. Finland, consistently among the world’s top-performing education systems, runs school for just four to five hours a day, gives students approximately 14 weeks of holiday a year, and still outperforms countries with far more instructional hours. It is a reminder that educational success is not about stretching time inside classrooms. It is about what those hours actually produce.

And it is, according to neuroscientists, about how students spend their time outside classrooms. During unstructured time, the brain activates what researchers call the default mode network, associated with imagination, reflection and creativity. These are the moments when ideas connect seamlessly, when curiosity emerges naturally and when children begin exploring interests because they genuinely want to, not because they are being assessed.

Psychologists studying creativity and motivation consistently show that intrinsic motivation, doing something out of curiosity rather than obligation, produces deeper learning and originality. Long holidays are often the only extended periods where this can exist without interruption.

Even boredom serves an important developmental function. When children are not constantly entertained, they are eventually forced to ask a simple question: what do I want to do? That question builds initiative, imagination and self-direction.

And then there is the body itself. Teachers and parents often notice children returning from long holidays visibly calmer, more settled, sometimes even physically taller. This is not a coincidence. Research has long established strong links between rest, sleep, and childhood growth.  Deep sleep, which becomes more consistent during less stressful and less rushed periods, is closely tied to physical development, emotional regulation, memory consolidation and overall wellbeing.

Long breaks also create the space for things education systems increasingly claim to value but rarely create enough room for: sports, hobbies, travel, reading for pleasure, family connection, cultural experiences, internships, camps, independent projects. More importantly, they allow children enough uninterrupted time to discover their interest areas and a direction in life that feels uniquely their own. Without this space, many simply move through systems mechanically, follow instructions and eventually graduate without much clarity about what they genuinely want to pursue.

Ironically, many of the same adults who say they want children to become creative, independent, resilient and emotionally intelligent are often uncomfortable giving them the very conditions required for those qualities to develop.

There is another dimension to this conversation that receives far less attention: teachers.

What the public sees is a teacher standing in front of a classroom. What often remains invisible is the emotional and relational labor surrounding that role. Lesson planning, grading, supervision, student support, parent communication, administrative work and curriculum preparation all continue well beyond the school day. A teacher is often responsible not just for students, but for entire ecosystems of communication and care surrounding them.

Globally, teacher burnout and attrition are rising, driven largely by workload pressure and lack of recovery time. UNESCO reports teachers are leaving the profession within their first few years, resulting in severe and growing teacher shortages worldwide. Long holidays are not a luxury in this context. They are often the only meaningful periods for recovery, reflection, planning and preparation.

Of course, there are real challenges for working families during long school holidays. Childcare is a genuine concern. But reducing children’s rest and developmental time is not a sustainable solution. It simply transfers adult logistical pressures onto children rather than addressing them systemically.

If anything, the conversation Nepal should be having is not how to reduce holidays, but how to better support families during them while still protecting children’s need for rest, exploration, and unstructured growth.

The move toward a two-day weekend reflected an important shift in thinking, an acknowledgment that rest is not separate from learning, but is part of it. That same understanding now needs to extend to school holidays as well–because children are not machines that produce better outcomes the longer they remain operational.