The government has brought a budget of Rs 1.964 trillion for the fiscal year 2025/26, targeting 6% economic growth and aiming to keep inflation below 5.5%.

Unveiling the fiscal plan in a joint session of the Federal Parliament on Thursday, May 29, Deputy Prime Minister and Finance Minister Bishnu Paudel said the budget integrates several key recommendations from the High-Level Economic Reform Commission, led by former Finance Secretary Rameshore Khanal.

The proposed budget is 5.6% larger than the one presented for the current fiscal year by then Finance Minister Barshaman Pun, and 18.2% higher than the revised estimate issued during the mid-year review.

Despite a consistent trend of increasing annual budget allocations, the government has historically struggled with effective execution—an issue this year’s budget aims to address through structural and procedural reforms.

Of the total, Rs 1.18 trillion (60.1%) has been allocated for recurrent expenditure, Rs 407.89 billion (20.8%) for capital expenditure, and Rs 375.24 billion (19.1%) for financing. 

To fund this spending, the government plans to raise Rs 1.315 trillion through revenue collection and expects to receive Rs 53.45 billion in foreign grants. Despite these efforts, a financing gap of Rs 595 billion remains, which the government intends to bridge through foreign and domestic borrowing, each amounting to Rs 233 billion and Rs 362 billion, respectively. 

In comparison, the current fiscal year’s Rs 1.86 trillion budget had earmarked 61.31% for recurrent spending, 18.94% for capital expenditure, and 19.74% for financing. 

This news has been updated.

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