The Government of Nepal has unveiled its federal budget for the fiscal year 2082/83, aiming to strike a balance between fiscal discipline and economic growth. Presented by Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel, the NPR 1.964 trillion budget prioritizes the completion of ongoing development projects over new initiatives, aligning resources with achievable goals.
Emphasis on Development Projects
A significant highlight of the budget is the allocation of NPR 407.89 billion to development projects, marking a 55.54 billion increase from the current fiscal year. This allocation constitutes 21% of the total budget, making it the second-largest development budget in Nepal’s history. The government’s strategy includes completing high-priority projects, ensuring no resource shortages for those with over 80% progress, and preventing fund reallocations from critical projects.
To enhance infrastructure development, a new policy framework will streamline environmental approvals, coordinate efforts among federal, provincial, and local levels, and optimize project management through a national project bank system. Notably, the government has pledged to ensure timely project completion by introducing three-shift work schedules and holding officials accountable for delays.
Controlled Current Expenditure
Despite the increased development budget, the government has demonstrated fiscal restraint by limiting the growth of current expenditures to NPR 1.180 trillion, a modest increase of NPR 40 billion from the previous year. This strategic allocation reflects a commitment to efficient resource utilization while addressing pressing financial obligations, including loan repayments and institutional investments.
Challenges in Revenue Generation and Borrowing
The budget anticipates generating NPR 1.315 trillion in revenue, a challenging target given Nepal's current economic landscape. To bridge the deficit, the government plans to raise NPR 595.66 billion through domestic and international borrowing and expects NPR 53.45 billion in foreign grants. This approach, however, underscores concerns about increasing public debt and the sustainability of funding mechanisms.
Strengthening Federalism through Financial Transfers
The federal government has allocated NPR 582.83 billion for financial transfers to provinces and local governments, an increase of NPR 9 billion from the current fiscal year. Equalization grants, conditional grants, and revenue-sharing mechanisms have been refined to support decentralized development while minimizing redundancies.
Provinces and local levels are poised to receive NPR 165 billion through revenue sharing, with additional funds allocated for infrastructure development and capacity-building programs. However, some reductions in complementary and special grants have drawn criticism, highlighting the need for a more balanced approach to federal resource distribution.
A Roadmap for Growth
The budget’s focus on project continuity, infrastructure expansion, and policy streamlining reflects the government’s vision of fostering sustainable economic growth. By addressing long-standing issues of resource misallocation and project delays, the new budget aims to achieve a 6% economic growth rate in the upcoming fiscal year.
Yet, challenges persist. Meeting ambitious revenue targets, managing public debt, and ensuring effective implementation of development projects will require robust governance, accountability, and collaboration across all levels of government.
As Nepal charts its path toward sustainable development, this budget could mark a significant step forward-if promises translate into action.
