Finance Minister Bishnu Poudel has suspended programmes worth Rs 13.5 billion, citing severe pressure on the state treasury in the first seven months of the current fiscal year.
In mid-February, Poudel directed then-Finance Secretary Dr. Ram Prasad Ghimire to halt the budget allocation for these programs immediately. The suspension affects 25% of government spending, excluding mandatory current expenditures. In a letter to all ministries, commissions, and offices, the Finance Ministry ordered a freeze on budget allocations under five categories: employee training (except those conducted by training centers and institutes), program expenses, machinery and tools, furniture and fixtures, and capital consulting. A Finance Ministry official confirmed that the directive has been in effect since February 13.
According to government sources, the Gandaki Triangle Project worth Rs 2 billion is among the halted programs. The Finance Ministry cited resource constraints, noting that the federal reserve fund remained in a negative position for six months due to sluggish economic activity. As of mid-February, government revenue stood at Rs 642.85 billion, while expenditure reached Rs 754.85 billion, resulting in a budget deficit of over Rs 112 billion, according to the Financial Comptroller General Office.
The Finance Ministry recently reduced the budget size due to resource crunch. A mid-term budget review stated that the government will adopt austerity measures to maintain current spending at a reasonable level. It also specified that no new organizational structures or positions would be created in government offices, regulatory bodies, or public institutions. Additionally, foreign visits would not be approved except for mandatory participation in programs or annual meetings of organizations where Nepal holds voting rights.
The Finance Ministry has also scrapped fuel allowances for government employees due to financial constraints. The policy, introduced in the 2023/24 budget by then-Finance Minister Dr. Prakash Sharan Mahat, had replaced fuel coupons with cash allowances under the Guidelines for Providing Cash for Fuel to Employees Receiving Vehicle Facilities, 2080 .
Under the guidelines, secretaries and joint secretaries received a lump sum equivalent to 125 liters and 100 litres of fuel per month plus five liters of mobil/brake oil quarterly. Employees using electric vehicles received half the amount. However, receipts were not required for reimbursement, leading to widespread misuse. Following reports of inflated claims by ministerial staff, the Finance Ministry revoked the directive in mid-February and notified all concerned agencies of its cancellation.
