With ministries submitting their program and budget proposals for Fiscal Year 2025/26, the Ministry of Finance has begun preparations for the next phase of the budget-making process, which involves consultations with stakeholders.

According to officials, the ministries have submitted their proposals through the Line Ministry Budget Information System (LMBIS), based on previously set budget ceilings. The next step involves theoretical discussions on these proposals.

"Discussions will now begin with thematic ministries, political party representatives, former finance ministers, former central bank governors, ex-finance secretaries, economists, and other experts," said Shyam Prasad Bhandari, Joint Secretary and Spokesperson at the Finance Ministry. "These talks are scheduled to start this week."

The ministry aims to prepare a draft of the Principles and Priorities of the Appropriation Bill by April 23 and present it to both houses of the federal parliament by April 28. The Revenue Advisory Committee is expected to submit its report to the Finance Minister by May 15, by which time the first draft of the budget will be ready. Under the revised process, the Finance Minister will brief the President before the draft is finalized and submitted to the Council of Ministers and the National Planning Commission (NPC).

Ahead of the budget presentation, the government will table the annual economic survey and progress reports of public corporations and ministries. As per constitutional provisions, the government will present the budget for FY 2025/26 in a joint session of the House of Representatives and the National Assembly on May 29. The Ministry of Finance plans to introduce the Economic Bill , Appropriation Bill , National Debt Recovery Bill , and Loan and Guarantee Bill alongside the budget.

The Resources Committee, chaired by the NPC Vice Chair, has set a tentative budget ceiling of Rs 1.9 trillion for the upcoming fiscal year. The current fiscal year’s budget was Rs 1.86 trillion, later revised downward by about Rs 200 billion during the mid-term review.

Although the increase in the ceiling appears modest, experts caution against preparing the budget based on this figure due to uncertainty surrounding foreign aid. Historically, the government has introduced budgets that fall short of the initial ceiling.

Former Chief Secretary Bimal Koirala said a Rs 1.9 trillion budget is not feasible under current circumstances. “A realistic target would be around Rs 1.7 trillion. If there’s political will, that amount would be sufficient—we don’t need a large budget just for the sake of it,” he said.

Koirala noted that foreign assistance is declining sharply, with major donors like the U.S. cutting back. “The government must focus on expanding the domestic revenue base,” he said. Recently, the U.S., Nepal’s largest bilateral donor, announced a cut of around Rs 46 billion in aid via USAID. The status of the $550 million grant under the Millennium Challenge Corporation (MCC) also remains uncertain.

Koirala added that integrating the informal economy into the formal sector could significantly boost revenue. A study by Tribhuvan University’s Central Department of Economics last year estimated that Nepal’s informal economy accounts for 41 percent of GDP.

“It may not be possible to formalize the entire informal sector immediately, but even bringing in half of it would generate substantial resources,” he said.

Finance Ministry spokesperson Bhandari said efforts are being intensified to formulate a realistic and implementable budget.