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Deputy Prime Minister and Minister for Finance Bishnu Prasad Paudel assured that the newly introduced budget for the fiscal year 2025/26 would ensure proper utilization of the available resources and to foster infrastructure development. 

In a discussion organized by the Society of Infrastructure Journalists (SIJ-Nepal) on the 'Infrastructure sector in budget and its implementation', DPM Paudel reiterated that the budget has been devised to prevent the misuse of the resources in construction of infrastructures.

Paudel added that the budget was allocated in a realistic approach taking into consideration the needs of the nation and available resources.

According to him, several reform measures have been introduced and implemented to address the longstanding problems and challenges in the infrastructure sector. He believed that these measures would yield result-oriented outcomes.

"Budget is only a single digit document. The budget is prepared in a realistic way so that the credibility of the budget is not questioned," the DPM asserted, claiming that there has been no criticism of the newly introduced annual estimates of income and expenditure.

It may be noted that the incumbent government on May 29 had introduced an annual budget of Rs 1.964 trillion for the fiscal year 2025/26.

Furthermore, for fiscal discipline, he informed that the budget includes a dedicated focus on capital expenditure to ensure proper management of the resources and timely spending of the allocated budget. 

In a departure from the trend of increasing general expenditure, the DPM highlighted that stringent measures have been put in place to cap the general expenditure to prevent excessive recurrent spending. 

As for the Public Procurement Act, he informed that the 14th amendment to the Act has already addressed some existing issues. He expressed his readiness to consider further amendments in the Act if need be, so as to promote the country's construction sector. 

Addressing concerns over shortage of construction materials affecting construction works' timeliness, the DPM said that the excavation of mining and aggregate materials will be allowed from only appropriate places and after conducting environment impact assessment.

Citing the provision of alternative development financing for mega projects introduced by the government, he was confident that the Parliament would endorse necessary laws to facilitate such provisions.

The new fiscal budget presented on Thursday has effectively halted the progress of around 17,117 MW of run-of-river (RoR) hydropower projects in Nepal by introducing a major policy shift in the Power Purchase Agreement (PPA) model.

Until now, RoR projects operated under a ‘Take or Pay’ PPA model, where the Nepal Electricity Authority (NEA) had to pay private developers regardless of whether it used the electricity or not. The latest budget, however, proposes a shift to a ‘Take and Pay’ model, meaning the NEA will only pay for the electricity it actually purchases.

Ganesh Karki, President of the Independent Power Producers’ Association of Nepal (IPPAN), warned that this policy change could render investments already made by private developers in RoR projects unviable. He said banks are unlikely to finance projects under the new PPA model, pushing many developments to the brink of cancellation.

According to IPPAN, 17,117 MW worth of RoR projects currently hold licenses from the Department of Electricity Development, with approximately Rs 66bn already invested. These projects are in various stages of development, awaiting PPAs and financial closure. Once fully implemented, total investment could reach Rs 3.4trn. The breakdown includes 2,078 MW of projects already under construction, 6,436 MW awaiting construction permits, 5,079 MW with survey licenses, and 3,521 MW awaiting survey permits.

This shift has frustrated private developers who had expected the budget to align with the government’s recently unveiled Energy Development Roadmap, which aims to generate 28,500 MW of electricity—15,000 MW for export to India and 13,500 MW for domestic consumption.

IPPAN claims the new provision makes it nearly impossible for the private sector to move forward, despite other budget promises like streamlining forest clearance, transmission line construction, and support for reservoir-based projects. Karki argued that unless developers can build the projects, these other incentives become meaningless.

“The government’s move has placed private developers in a position where their investment could drop to zero,” Karki said. “The state should not have issued licenses in the first place if it planned to later change the agreement terms. The Department of Electricity Development continues to issue licenses, but developers are now left in limbo.”

NEA sources said the switch to ‘Take and Pay’ is necessary for the financial sustainability of the authority. The previous model, where payments had to be made even without actual power usage, posed significant financial risks—especially during the monsoon when RoR production exceeds domestic demand and guaranteed exports to India remain uncertain.

IPPAN has strongly opposed the shift and announced plans to launch protests if the decision is not reversed. In a statement released Friday, IPPAN described the new policy as hostile to private investment and a setback for Nepal’s power sector. The group also criticized the government for failing to support the ongoing development of RoR projects, which they claim still constitute a majority of the private sector’s hydropower activity.

IPPAN called for an immediate revision of the policy and demanded a return to the ‘Take or Pay’ model. Failure to do so, they said, would prompt a “strong and decisive” protest campaign.

Currently, Nepal’s total electricity generation capacity is about 3,600 MW, with over 80 percent contributed by the private sector. Of the 17,117 MW of RoR projects awaiting PPAs, the NEA or the government is developing only 190 MW.

IPPAN argues that the new provision contradicts the Energy Development Roadmap and the goals set out in the 16th Five-Year Plan of the National Planning Commission. The association also claims the decision violates existing policies and legislation, including the Electricity Act 1992, the Hydropower Policy 2001, and the National Water Resources Policy.

The organization fears that this policy change will derail over Rs 1.5trn already invested by the private sector, and jeopardize an additional Rs 3trn planned for future investment, pushing the entire sector into uncertainty.

The government on Thursday announced a budget of Rs 1. 964 trillion for the fiscal year 2025/26.

Unveiling the annual budget at the joint session of the Federal Parliament today, Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel tabled the budget for the fiscal year 2025/26 with the size of Rs 1. 964 trillion.

"For the upcoming fiscal year, Rs 1.180 trillion (60.1%) has been allocated for recurrent expenditure while Rs 489 billion (20.8%) for capital expenditure, and Rs 375 billion (19.1%) for fiscal management," Finance Minister Paudel stated while reading out the annual budget.

The size of the budget for the upcoming fiscal year is higher than 5.6 percent compared to the current fiscal year's allocation and 18.2 percent higher compared to the revised one.

Of the total allocation, Rs 417.83 billion has been allocated for fiscal transfer for the provinces and local governments.

According to the finance minister, Rs 1. 315 trillion would be managed for the revenue collection and Rs 53.45 billion from the foreign grants.

Likewise, Rs 595.66 billion would be managed from loans including Rs 362 billion from internal loans and Rs 233.66 billion from foreign loans, Minister for Finance Paudel announced in the Federal Parliament meeting today.

The government has allocated Rs 86.1 billion for the Ministry of Energy, Water Resources and Irrigation.

Presenting the budget for the fiscal year in the joint meeting of the Federal Parliament on Thursday, Finance Minister Bishnu Paudel said that Rs 86. 1 billion has been allocated for the Ministry of Energy, Water Resources and Irrigation.

The government has allocated Rs 211.17 billion for the Ministry of Education, Science and Technology.

Presenting the budget for the fiscal year in the joint meeting of the Federal Parliament on Thursday, Finance Minister Bishnu Paudel informed that Rs 211. 17 billion has been allocated for the Education Ministry.  

World Health Organization officials, donors, and diplomats gathered in Geneva this week amid significant funding challenges following the United States decision to withdraw from the agency, according to Reuters.

The US, which contributed around 18 percent of WHO’s funding, was absent from the assembly as the organization faces a $600m budget shortfall for 2025 and plans a 21 percent funding cut over the next two years.

The WHO will focus on core priorities like vaccine approval, outbreak response, and providing treatment guidelines while scaling back training programs and offices in wealthier countries. Despite President Donald Trump’s recent comments hinting at a possible reversal, global health leaders say the US remains on course to officially leave the WHO in January 2026, Reuters reported.

South Africa’s finance ministry announced on Thursday that it will not proceed with the planned increase in value-added tax (VAT) from May 1, following political opposition and investor concerns over potential instability in the coalition government, as claimed by Reuters.

As part of the national budget for 2025, the National Treasury recommended a gradual 1 percent point rise in VAT over two years. However, the two major coalition partners, the African National Congress (ANC) and the Democratic Alliance (DA), were unable to agree on the initial 0.5 percent point raise.

As a result, the VAT rate would remain at 15 percent, the ministry confirmed. Finance Minister Enoch Godongwana is scheduled to propose amended versions of the Appropriation and Division of Revenue Bills in the coming weeks, Reuters reported.

The government has initiated preparations to prioritize programs in the upcoming fiscal year's budget aimed at addressing the challenges that Nepal could face following its graduation from Least Developed Country (LDC) status in 2026.

Concerns have been raised that Nepal’s current benefits in the global market may diminish after graduation. Post-graduation, Nepal will lose certain trade-related intellectual property advantages which could negatively affect Nepali products. However, government officials believe that proactive policy and diplomatic efforts could help mitigate these risks and maintain existing benefits.

In 2021, the UN General Assembly approved Nepal’s transition from an LDC to a developing country, based on the recommendation of the United Nations Committee for Development Policy. 

The Ministry of Finance has been engaging in discussions with relevant agencies to integrate the roadmap for Nepal’s graduation into the upcoming fiscal year’s budget. Intensive consultations have taken place between the National Planning Commission, the Ministry of Industry, Commerce and Supplies, and the Ministry of Finance on the issue.

Officials insist that there won’t be much impact from waiver of facilities post-graduation as it would not affect Nepal’s exports to India, its largest trading partner, which accounts for two-thirds of the country’s total trade. As a close neighbor, Nepal enjoys special concessions under bilateral agreements, which will remain intact even after graduation.

Nepal’s exports to China, where it enjoys duty-free access for several products, will also remain unaffected. Although current exports to China are minimal, the northern neighbor holds significant potential as a future export market for Nepal.

However, exports to other markets, such as the United States, the European Union (EU) and the United Kingdom—where Nepal currently benefits from LDC privileges—could face problems, according to finance ministry officials. They added that grant assistance could also diminish gradually post-graduation.

The finance ministry has stated that preparations are already underway to formulate new policies to address these issues. The goal is to align the graduation process with the budget’s objectives for sustainable development, a finance ministry official said.

During recent discussions, officials underlined the need to develop policies, plans and programs that will ensure the upcoming fiscal year 2025-26 is both smooth and sustainable and aligns with Nepal’s post-graduation strategies.

The finance ministry plans to support sustainable economic growth and job creation through fiscal policy, stable monetary policy and the effective operation of development assistance. Additionally, trade analysis and enhancing capacity and financial access for high-return projects are also among the ministry’s key priorities.

The criteria for LDC graduation include per capita gross national income, human asset index and economic and environmental vulnerability indicators, among others.

Officials say Nepal is expected to benefit from strengthened access to development and business investments, new trade and economic partnerships, sustainable development, enhanced national image, and increased credibility, among others, post-graduation.

With revenue affected by a slowdown in economic activities which has put pressure on resources, the government has hinted that the upcoming fiscal year’s budget will adopt austerity measures. Issuing guidelines for budget formulation for fiscal year 2025-26, which begins from mid-July, the Ministry of Finance has urged ministries to propose only essential budgets, maintaining fiscal discipline in current expenditures. 

The National Planning Commission (NPC) has given a budget ceiling of Rs 1,900bn for 2025-26. The finance ministry has requested ministries to reduce current expenditures in line with the criteria for making public spending frugal and effective. Budget proposals for software purchases and consultancy services should only be made if they contribute to the development of an integrated system with adequate justification and cost-effectiveness, the guidelines read.

Ministries have also been cautioned to avoid duplication of budget programs. The finance ministry has urged other ministries to not propose any budget for abandoned projects. It has said that expenditure proposals for furniture, fixtures and decorations should be made only in essential cases.

Due to resource constraints, the finance ministry has advised that additional funds should not be sought mid-fiscal year except under special circumstances. Ministries have also been instructed to make budget allocations for service contracts for vacant positions within the approved pay scale only. “Positions occupied by employees working in other offices or outside the pay scale should not be considered vacant, and no budget should be requested for such cases,” it added.

Ministries have also been advised against requesting budgets for purchasing machinery, equipment or furniture. Budgets for vehicle purchases and foreign travel should only be proposed in essential cases, the guideline states. All ministries must submit their budget proposals for the upcoming fiscal year by March 28.

The finance ministry has requested ministries to prepare budget proposals in such a way that it minimizes the need for fund transfers and program revisions. They have also been told to propose programs based on the project classification criteria introduced last year. Ministries have been told to not include projects and programs that can create long-term liability. Likewise, ministries must propose only quality projects and programs with completed preparations and cost-benefit analysis indicating feasibility. They have been instructed to make sufficient allocations for ongoing projects expected to be completed in the next fiscal year before proposing new programs and projects.

To ensure efficient use of limited resources, the finance ministry has told ministries not to spread resources across small projects. Ministries are required to reduce the number of sequential projects and suspend non-implementable and low-priority projects. When proposing projects, ministries have to include only those projects listed in the National Planning Commission's project bank. For new projects where studies are incomplete, budget allocations should only be requested for study and preparatory works, not for implementation.

The finance ministry has said that new projects and programs should be proposed only after ensuring availability of resources. The ministries have also been told to maximize the use of available resources to fulfill periodic plans, sectoral strategies, international commitments and national development goals. “Budget proposals should comply with guidance and suggestions received from the Prime Minister’s Office, constitutional bodies and regulatory bodies, among others”.

Conditional grants and new projects

According to the guidelines, conditional grants under intergovernmental financial transfers should be reprioritized to ensure continuity of quality projects.  “Sufficient funds should be allocated for salaries and other mandatory obligations of working personnel under conditional grants. For supplementary and special grant projects, budget proposals should cover liabilities created, and new projects should only be proposed for remaining amounts,” it added. “New projects should not be proposed if they contradict the criteria set by the supplementary and special grant procedures.”

Ministries and subnational governments have also been told to avoid duplication of projects and maintain institutional coordination to reduce risks by considering disaster sensitivity. Ministries have also been told to prioritize post-disaster reconstruction in their budget requests. “Projects with resource approval from the finance ministry must allocate sufficient funds to cover liabilities in the next fiscal year before proposing other projects and programs. Projects with assured resources should be reprioritized to ensure resource management,” the guidelines added. It states that budget proposals must include mandatory allocations for liabilities created by legally-incurred expenditures. 

Prime Minister Pushpa Kamal Dahal has said the government's policies and programs for the new fiscal year are in the interests of the citizens and Nepal.

Talking to the media at Bharatpur Airport today, the Prime Minister said that overall, the budget is satisfactory. "I hope it will be endorsed by the House of Representatives smoothly."

The Prime Minister claimed that the budget highlighted several government initiatives for good governance, social justice and prosperity. "I feel that more initiatives are needed to meet the people's aspirations."

Responding to a query about the possibility of the change of Inspector General of Police, he said no such thing would happen. "This is just a rumor," he said, adding that he recently summoned chiefs of security bodies and urged them to work confidently.

CPN-UML lawmaker Yogesh Kumar Bhattarai has emphasized on policy and structural change in the budget-making process.

Participating in the discussion on the allocation of various ministries under the Appropriation Bill, 2081 BS in today's meeting of the House of Representatives, Bhattarai complained that the budget book was filled up with 'small pocket' projects.

Urging to improve the situation of low capital expenditure and high financial expenditure, lawmaker Bhattarai remarked that "Pocket Bank" was used as a basis for budgeting without following the "Project Bank".

He further urged for giving up the illusion that elections could be won by taking small projects dispersed in the election constituencies.

Though the issue of taking advance tax in customs is fine in terms of increasing the income of the state, it will badly affect the consumers, he said.

Bhattarai further complained that the budget was not prepared after proper discussions with coalition parties in the government.

He urged the government to advance the Tamor Reservoir Project, which would be easy in terms of investment, as it is positive that the energy sector is being made the basis of Nepal's prosperity.

The Tamor project is located in Taplejung, Panchthar and Dhankuta districts.

Prime Minister Pushpa Kamal Dahal has been stating in various forums that a budget of up to Rs 1.9trn would be needed for the fiscal year 2024/25.

The private sector, meanwhile, has been saying that a larger budget would have an adverse impact on them. Speaking at a pre-budget roundtable recently, business leaders said a large budget size will put pressure on resources, and as revenue and tax rates will have to be increased for this, ultimately the private sector will have to bear the brunt. They said that the government should bring a budget that can be implemented rather than focus on its size. In their suggestions to the finance ministry, which is preparing the budget for the upcoming fiscal year, they have requested the government to not exert pressure and dampen the morale of the private sector.

Rajesh Kumar Agrawal, President of the Confederation of Nepalese Industries (CNI), said that if the government focuses on a large budget, it will put pressure on the private sector. “This will help neither the government nor the private sector,” he added. “A wrong narrative is being created that credit extended to the private sector is being misused. This should be corrected.”

Likewise, Chandra Prasad Dhakal, president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), urged the government to bring a budget that can be implemented. “Since we recently held the 2024 Nepal Investment Summit, the coming fiscal year should be taken as the beginning of the investment decade. It seems that the monetary policy was not in sync with the budget. As a result, the government is not being able to achieve what it intends to achieve,” he added. Likewise, Nepal Chambers of Commerce (NCC) President Kamlesh Agrawal requested the government not to increase tax rates that would put an additional burden on the private sector. “Rising tax rates alone do not guarantee revenue growth. It can encourage smuggling,” he added.

Sunil KC, president of the Nepal Bankers’ Association, complained that construction entrepreneurs have been adversely affected as the government has not increased the size of capital expenditure which has ultimately led to an increase in bad loans in banks. “The construction sector accounts for the highest non-performing loans (NPLs) in the banking system. This situation has arisen because the government failed to make capital expenditures,” he added.

Likewise, Upendra Prasad Paudyal, president of the Bank and Financial Institutions Association of Nepal (BFIN), said NPL levels in the banking system can be controlled if the government is flexible towards the construction sector. “The government should encourage construction even by issuing bonds if needed. If that sector rises, NPLs will decrease, and other sectors will also improve,” he said.

On the other hand, Ganesh Karki, president of the Independent Power Producers’ Association (IPPAN), suggested that the budget give special priority to the hydropower sector, as hydropower construction not only generates electricity but also builds roads, triggers market expansion, and creates employment simultaneously.Similarly, Karan Kumar Chaudhary, president of the Nada Automobile Association of Nepal, complained that the government has forgotten the automobile sector. He said that the automobile sector has fallen victim to double taxation.

Economist Prof Dr Achyut Wagle suggested making bold decisions and showing courage for reforms, as the sectors traditionally considered the backbone of the economy are currently facing problems. “Nepal is falling behind as it has failed to identify and develop potential sectors. There is a need to explore new revenue sources,” he added. Likewise, Resham Thapa, head of the Department of Economics under Tribhuvan University, said local units shouldn’t be undermined while preparing the budget.

The government is aligning the budget for the fiscal year 2024/25 with the policies outlined in the 16th National Plan, the strategy set for graduation to a developing country in 2026, the sustainable development goals 2030, and the need to create a basis for sustainable and comprehensive economic growth.

Presenting the principles and priorities of the Appropriation Bill in the House of Representatives on Tuesday, Minister for Finance Minister Prakash Sharan Mahat said that the upcoming budget will primarily focus on bolstering production and productivity through increased public spending on prioritized projects.

Pre-budget discussions have begun in the House of Representatives three months ahead of the budget day, scheduled for May 28, this year. Earlier, the government used to table the principles and priorities of the appropriation bill 15 days prior to the budget day. The government amended the provision by bringing an ordinance.

The government is putting focus on strengthening the financial sector. Minister Mahat, in the principles and priorities document, has expressed commitment to enhance the efficacy of regulation and supervision in the financial sector, with the aim of developing a robust, competitive, and dependable financial landscape. Additionally, the government has promised to enhance the professionalism of regulatory bodies overseeing banks, financial institutions, microfinance, insurance, and the share market, while also prioritizing transparency and accountability.

The budget principles revolve around sustainable and inclusive economic growth, balanced public finance, efficient budgetary allocation, social sector development, social justice, private sector promotion, federalism, good governance, sustainable development, and climate change.

Moreover, the government has identified hydropower development, modernization and commercialization of agriculture, development of tourism and IT sector, infrastructure development, social sector upliftment, green development, disaster management, harnessing demographic dividends and youth mobilization, strengthening of the financial sector, upholding the rule of law, and fostering international cooperation and relations are the priorities of the government.

Speaking in the House of Representatives, Minister Mahat said that the new budget will prioritize high growth rate while maintaining macroeconomic stability and enhancing the living standards of citizens. “The budget will be tailored to elevate the country’s economy to the standards of the global economy and improve the livelihoods of those struggling to meet their basic needs,” Mahat added. He insisted that the country's economy is moving in a positive direction. 

“The increase in electricity generation and tourist numbers as well as the rise in foreign investment have contributed positively to the economy. There is sufficient liquidity in the banking sector and the interest rate is falling towards single digit,” Mahat said. “Although the revenue collection is not as per the target, the growth rate is around 10 percent. I am confident that it will increase further in the coming days.”

Furthermore, the budget will focus on mobilizing government resources for sustainable and inclusive economic growth, channeling investments into critical public infrastructure sectors such as energy, agriculture, tourism, and information technology. Efforts will also be directed towards facilitating private sector investment to stimulate production, productivity, and job creation domestically.

To ensure the efficient allocation of public expenditure, the government has said that it will prioritize projects based on pre-assessment and completion criteria and ensure that priority projects won’t face dearth of resources. 

Moreover, the government has said in the policies and priorities document that it would increase revenue mobilization through business and investment-friendly taxation policies and allocating public resources towards service delivery, socio-economic infrastructure development, and human capital enhancement. Likewise, the government has said that it would eliminate duplication in subsidies and benefits by focusing resources on target groups, while also implementing necessary policy, legal, and institutional reforms to foster a conducive environment for domestic and foreign investors, notably through the Nepal Investment Summit scheduled for April 2024.

Furthermore, the government has said that it would streamline public service delivery, making it more citizen-friendly and aligned with federal norms and values. Likewise, it plans to focus on increasing electricity generation through domestic and foreign investments, thus promoting a green economy by boosting domestic electricity consumption.

The government said in the policies and priorities document that it would develop Nepal as a premier tourism destination by resolving operational obstacles at Pokhara and Bhairahawa airports, initiating the construction of Nijgadh International Airport, and ensuring timely completion of strategic projects such as the Kathmandu Tarai Madhes Expressway and crucial highways. Likewise, the government has said that it remains committed to advancing the health insurance program, promoting youth-centric entrepreneurship, and fostering domestic employment opportunities to mitigate the need for youth migration abroad for employment.

Capital expenditure is not gaining momentum this year as well. Only 19 percent of the capital budget has been spent even though six months of the fiscal year have already passed.

Amid this backdrop, the government has begun preparations for the budget for the fiscal year 2024/25. Experts say unless a systemic change is made in budget implementation, all these lengthy preparations for the budget will yield no result.

Out of the Rs 302.07bn allocated for capital expenditure in the current fiscal year, only Rs 57.74bn have been spent so far. Slow capital spending has affected the overall economic cycle in the country. Cash flow to the market has been affected. As a result, manufacturers of cement, steel, and other construction materials, as well as laborers, have been affected. Banks are awash with loanable funds. Interest rates too have come down. But new demands for loans are not coming.

On the other hand, the government hasn’t been able to meet revenue targets. The government has set a target of raising Rs 1,422.54bn in fiscal year 2023/24, which ends in mid-July. But it has mobilized only Rs 549bn till the end of January.

Although the external sector of the Nepali economy has improved of late, the economy continues to see pressure on internal sectors, economists say. The share of exportable goods to total trade has come down as factories are running below capacity. The share of imports, as a result, has reached 91.11 percent in Nepal’s total trade. Since imports have also come down due to a fall in demand, the government’s revenue has been hit.

The National Planning Commission (NPC) recently completed discussions with ministries on their priorities and programs for the fiscal year 2024/25. “The ministries have been told to bring programs based on the 16th National Plan document. Since it will be the first fiscal year of the 16th Plan, the ministries should make a policy departure to incorporate basic tenets of the plan,” Ramesh Paudel, a member of the NPC, said.

According to Paudel, the NPC would provide a budget ceiling for ministries after studying their proposals. “We will also get the idea of resources by holding discussions with the Revenue Advisory Committee. We will take resources available to us into consideration while setting a budget ceiling for ministries,” he added.

Economic expert Dilli Raj Khanal said the NPC should set up a division to analyze allocations made to ministries, actual budget spent, and the income and expenditure pattern. “The budget-ceiling process looks like mere ritual. This is because the actual budget is entirely different from what the NPC estimates,” he added. “The credibility of the overall budget is losing due to the tendency of spending the budget in the last month of the fiscal year. This is happening because of haphazard budget allocation and the tendency of powerful people selecting programs without rationale.”

Another economic expert, Chandra Mani Adhikari, said since ministries select programs and priorities based on the ceiling provided by the NPC; NPC should set the ceiling at the earliest. “Since capital spending is not picking up, there is a need to change the budget system and working style, and hold the people responsible for this accountable,” Adhikari said. He also said NPC should discourage ministries from entering unfeasible projects in its project bank. “Only the projects ready for implementation and for which resources are guaranteed should get priority in the budget,” he said. “Also, NPC should clearly state that implementing agencies will be held responsible if projects are not implemented as per the schedule.”

Dhaniram Sharma, the spokesperson for the finance ministry, said he was confident that the capital budget would be spent in the remaining months of the fiscal year. “Slow spending is due to shortcomings in prioritizing projects. That is why the ministry has prepared a standard for the classification of the budget based on their priorities,” he added. “It controls small projects. We will strictly enforce the standards in the coming fiscal year.”

Since ministries can’t propose programs having a budget of less than Rs 30m, Sharma said the number of small projects will go down considerably. “This will, in turn, increase public spending,” he added.

The ministry has also prepared standards for tendering for multi-year projects. As per the standards, such projects should be tendered by mid-October. The standards will also come into operation from the next fiscal year.

The finance ministry has already held the first round of discussions with the ministries on the upcoming budget. “We will hold the next round of meetings after the NPC sets the budget ceiling,” Sharma added.

The government has managed to spend around 20 percent of the budget allocated for 2023/24 in the first four months of the fiscal year.

According to the Financial Comptroller General’s Office (FCGO), the government has spent Rs 355.63bn out of Rs 1,751.31bn allocated in the current fiscal year.

The government has so far expended 23.75 percent of its recurrent budget, 9.93 percent of the capital budget, and 17.72 percent of its budget allocated for financial management.

Out of the total budget, Rs 1,141.78bn has been set aside for recurrent expenditure, Rs 302.07bn for capital expenditure, and Rs 307.45bn for financial management in the current fiscal year.

According to the FCGO, the government has spent Rs 271.17bn of its recurrent budget. Likewise, Rs 29.98bn of the capital budget has been spent so far, while it has spent Rs 54.46bn of the budget allocated for financial management.

The government uses funds allocated for financial management to service its domestic and foreign debt.

In the current fiscal year, the government has allocated more budget for financial management compared to the capital budget.

Looking at the government spending over the first four months, spending toward financial management is more than double of what the government has managed to spend toward capital spending. This means the government's spending toward servicing foreign and domestic debt is higher than what it is spending on development works.

The government's capital spending gains momentum in the fourth quarter as implementing agencies often initiate projects at the eleventh hour to avoid budget freeze. Spending taxpayers' money in this manner is incorrect because a substantial portion of these payments occurs without adherence to proper processes and legal mandates. This compromises the quality of work. Such spending is often done in collaboration among implementing agencies i.e. government offices, contractors and suppliers.

During the first four months of 2022/23, the government's total spending stood at Rs. 351bn. Recurrent expenditure, capital expenditure, and financial management expenditure amounted to Rs 281.39bn, Rs 26.30bn, and Rs 43.31bn, respectively, in the review period.

The government mobilized 20.08 percent of the revenue target set for the current fiscal year in the first four months of 2023/24. Out of Rs 1,422.54bn that the government is looking to raise in the current fiscal year, the government mobilized Rs 276.64bn in the first four months. Of the total revenue, Rs 254.30bn is from tax revenue, and Rs 22.33bn is from non-tax revenue.

Likewise, the government has managed to mobilize Rs 3.75bn as foreign grants in the four months of 2023/24. This is 5.42 percent of Rs 49.94bn that the government is looking to raise under foreign grants in the current fiscal year.

Medical experts have expressed concerns about the challenges in providing quality healthcare, citing that the budget allocated to the health sector for this fiscal year is not enough.

The government has allocated a health budget of Rs 83.99bn, which is lower than the sums allocated in the previous two fiscal years. In the fiscal year 2021-22, the Ministry of Health and Population received an allocation of Rs 122.77bn. The figure was Rs 90.69bn for the fiscal year 2020/21. 

The government has decided to make healthcare accessible and qualitative to all. It has also pledged to expand public access to specialized healthcare, and prioritized the prevention, control and treatment of Covid-19 along with other infectious diseases. Funds have also been allocated for the prevention of dengue, malaria, kala-azar, encephalitis, and other seasonal and insect-borne diseases.

As per the plan to treat and prevent infectious diseases, the government has announced plans to upgrade Sukraraj Tropical and Infectious Disease Hospital into a 300-bed facility. A Rs 460m plan has also been outlined for the construction and operation of provincial communicable disease hospitals in Pokhara, Surkhet, Doti, and Bharatpur. A budget allocation has also been announced to upgrade all provincial hospitals into teaching hospitals with super-specialty facilities. 

But health experts say the ambitious plan announced by the government to improve the country’s health sector and the budget earmarked do not complement each other. Many of the plans, they say, also seem rushed and overlook some crucial aspects such as hiring medical professionals and training them.

 “If the government wants to upgrade and operate infectious disease hospitals, then it must recruit specialized human resources and train them,” says Dr Anup Bastola, tropical and infectious disease expert. The recruitment and training parts do not figure in the budget.  

The government has also earmarked Rs 1.28bn to provide 98 types of medicines, vaccines, and basic health services free of charge from primary health service centers in 6,743 wards throughout the country. 

“Instead of purchasing medicines, the government should focus on maintaining quality healthcare,” says Dr Ajay Kumar Jha, Consultant Hematologist, Vayodha Hospital.

The government has also decided to give continuity to the provision of Rs 5,000 monthly medical allowances to individuals who have undergone kidney transplantation, are undergoing dialysis, have been diagnosed with cancer, or have spinal paralysis. The scheme was introduced in January 2018 by the government led by Sher Bahadur Deuba. It was briefly discontinued by the KP Oli led government.

Likewise, Rs 2.50bn has been allocated to continue grants for the treatment of heart disease, kidney disease, cancer, Parkinson’s disease, Alzheimer’s disease, spinal injuries, head injuries, and sickle cell anemia to poor citizens.   Some health experts and medical professionals like Dr Jha are of the view that a distributive approach to healthcare budget is no way to improve Nepal's health sector. 

“It would have been better to strengthen the services rather than distributing monthly allowance to the patients,” says Dr Jha. Arrangements will be made to provide kidney transplantation services at all provincial hospitals as per the Finance Minister Prakash Sharan Mahat. 

“If the government can provide such services in all the federal hospitals then it will help patients to seek the health care in their hometown. Additional financial burden of the patients will be lowered and crowds in hospitals in the federal capital will also be decreased,” says Dr Jha.

The government has also allocated Rs 820m to purchase health equipment for 100 hospitals that are set to be completed next year. Again, another myopic plan that could end badly, say health experts, pointing out to the fact that many expensive health equipment remain unused in hospitals and other health facilities due to a lack of proper space for their installation and untrained human resources to operate them   

There is also an allocation meant for procurement of medical equipment and and infrastructure development for BP Koirala Memorial Cancer Hospital, GP Koirala National Center for Respiratory Diseases, Sushil Koirala Prakhar Cancer Hospital, Manmohan Cardiothoracic Vascular and Transplant Center, Suresh Wagle Memorial Cancer Hospital, Ramraja Prasad Singh Academy of Health Sciences, and Bhaktapur Cancer Hospital. In addition, Rs 8bn has been announced to give continuity to the construction of 5-, 10-, and 15-bed hospitals in 322 local levels across the country. 

Dr Dipendra Pandey, consultant orthopedic surgeon, Koshi Hospital, says with an allocation going for healthcare infrastructure development, there is also a need for health professionals to run them, an issue that the government didn’t address while announcing the budget.  

“The government has talked only developing healthcare infrastructure, but has not said anything about human resources,” he adds.

The government has also announced that special programs will be conducted to save the lives of mothers and their newborn in areas with high infant and maternal mortality rates, but health experts say such programs must be run across the country.

According to Nepal Demographic Health Survey 2016, maternal deaths are a subset of all female deaths. They are defined as deaths that occur during pregnancy or childbirth, or within 42 days after the birth or termination of a pregnancy, but are not due to accidents or violence. The maternal mortality ratio for the period 2009-2016 is 239 deaths per 100,000 live births. About 12 percent of deaths of women, age 15-49, are maternal deaths, the survey reports.

“In order to prevent maternal and infant deaths, the government must come up with plans to deliver maternity services from all health institutions. It should not be limited to a few ones,” says Dr Manor Din Shaiyed.  He is of the view that the healthcare allocation should be at least 10 percent of the total budget. 

To make the geriatric wards in government hospitals more effective, the government has announced plans to set up necessary arrangements for screening and treatment of age-related diseases, including dementia, and Alzheimer's disease, in coordination with the nearest specialized hospital. Similarly, Rs 1.15bn has been set aside for the “Tuberculosis-free Nepal Campaign” to identify patients and provide free distribution of medicine.

The government has also said that Geta Medical College will be operated as the Shahid Dashrath Chand Institute of Health Sciences. A budget has been allocated for infrastructure construction, equipment purchase, and manpower management to upgrade Geta Hospital into a 100-bed facility. A budget has also been allocated for the development of infrastructure to expand the services of Rapti Academy of Health Sciences. Plans and budget have also been announced to initiate the process of establishing a 100-bed satellite hospital in Rakam, Aathbis Municipality, Dailekh under the Karnali Institute of Health Sciences.

Allocations have also been made for the capacity expansion of the National Trauma Center, and setting up primary trauma care centers in Lamki, Kailali; Saljhandi, Rupandehi; Bardaghat, Nawalparasi West; Gaindakot, Nawalpur; Bhiman, Sindhuli; and Belkhu, Dhading.

The government has also announced plans to make arrangements for specialty doctors who have completed their MD and MS under state scholarship programs to serve in government hospitals outside Kathmandu Valley. 

To improve the quality of health services, Rs 240m has been allocated for the implementation of the “one-doctor, one-hospital” program. 

Dr Pandey, from Koshi Hospital, says the government has come up with a list of plans in the name of improving the health sector and healthcare accessibility, but has not announced any program to encourage health professionals. 

“There are no proper plans to stop health professionals from migrating to foreign countries for better opportunities. Construction of hospital buildings and adding medical equipment alone is not enough.”