Ministry of Finance

The Nepali government is finalizing the budget for fiscal year 2083/84, set to be presented by Jestha 15, with a strong emphasis on fostering a private sector-friendly investment environment and implementing economic reforms. Key policy priorities include reducing acquisition and tax-related hurdles, enhancing the one-door service system, and increasing investment in industrial infrastructure to lower costs. The Finance Minister has described the upcoming budget as the commencement of a new, transformative phase of economic reform.

Finance Minister Dr. Swarnim Wagle has stated that the upcoming fiscal year's budget will prioritize excluded regions such as Sudurpaschim and Karnali, aiming to expand the middle class by uplifting weaker segments of society. He emphasized the adoption of a 'mission mode' for development projects and assured that the budget's principles and priorities would reflect honest implementation efforts.

The Nepali government is preparing to reduce the budget size and ministry ceilings for the upcoming fiscal year, with significant cuts planned for ministries focused on production and development. Conversely, budgets for administration and security agencies are expected to increase. Ministry secretaries have indicated that the allocated budgets are insufficient for their proposed projects.

Nepal's public debt has increased by over Rs. 300 billion in the first ten months of the current fiscal year, reaching a total of Rs. 2,975.04 billion by mid-May 2026. This surge is attributed to both domestic and external borrowing, with currency depreciation alone adding Rs. 167.75 billion to the debt burden. The government has also spent Rs. 292.52 billion on debt servicing during the same period.

Nepal's economic growth forecasts for the fiscal year 2025/26 are showing significant divergence, with the World Bank predicting 2.3%, the Asian Development Bank 2.7%, and the National Statistics Office 3.85%. Meanwhile, the Chinese app TikTok is in a tax dispute with Nepalese authorities over unpaid Value Added Tax (VAT) for the current fiscal year, despite having paid VAT in previous years. Development Finance Institutions (DFIs) have collectively invested $1.09 billion in Nepal's private sector between 2014 and 2023, with a significant portion directed towards hydropower and commercial banks like NMB Bank.

The Nepali government is preparing new regulations to govern colleges affiliated with foreign universities, according to Minister for Education and Sports Sasmit Pokharel. This initiative stems from numerous complaints regarding the operation of such institutions, with a draft regulation already sent to the Ministry of Finance and Ministry of Law for feedback before cabinet approval.

The Nepalese government is reportedly preparing to increase the customs duty-free limit for goods crossing the Nepal-India border, potentially raising it to between Rs 2,000 and Rs 2,500. This proposed change, expected to be introduced in the upcoming budget, comes in response to public outcry and a Supreme Court intervention regarding the previous Rs 100 limit.

The Beni-Jomsom-Korala Road Project has commenced the upgrade of the nine-kilometer Jomsom-Kagbeni road section, a critical part of the Kaligandaki Corridor, at a cost of approximately Rs 70 million. This upgrade aims to address structural damage caused by natural elements to the previously blacktopped road. Meanwhile, the Ministry of Finance has approved a substantial Rs 54.5 billion for 21 major infrastructure projects nationwide, including significant allocations for various corridors and highways.

Nepal's total arrears have reached Rs 755 billion, with an additional Rs 88.09 billion added in the last fiscal year, according to the latest report from the Office of the Auditor General. The report highlights systemic dysfunction, particularly within the Ministry of Finance, which accounts for over 70 percent of the arrears, indicating a failure in fiscal discipline and management across government levels.

Nepal Oil Corporation (NOC) reports a substantial decrease in the consumption of petroleum products, including diesel, petrol, and LPG, following government initiatives to curb fuel use due to soaring prices. Measures such as a Sunday public holiday and reduced fuel allowances for officials have contributed to this decline, with diesel consumption dropping by 27% and LPG by 17% in Baisakh compared to Chait.