The government has pledged to allocate budget for the fiscal year 2025/26 only to well-prepared, results-oriented projects, according to Deputy Prime Minister and Finance Minister Bishnu Paudel. Presenting the Appropriation Bill in the House of Representatives on May 11, Paudel stated that funding would be directed exclusively toward projects that have completed necessary preparatory work and have a clear investment and results framework. The objective, he said, is to eliminate distortions and irregularities in public finance.
A “readiness filter” will be applied to ensure that projects are completed on time, within budget, and according to the required quality standards. Scattered, overlapping, underfunded, or chronically delayed projects will not be prioritized, said Paudel emphasizing that public debt will be used more sustainably by investing in high-return projects of national importance. In parallel, efforts will be made to enhance revenue mobilization to maintain a balanced fiscal system.
The budget will include several national priorities. Among them is support for IT-based industries, with additional incentives aimed at promoting those with high export potential. The government will implement a revised project screening and prioritization process to ensure only eligible and strategically important projects are funded.
The government also seeks to remove Nepal from the Financial Action Task Force’s (FATF) “grey list” for anti-money laundering by next year.
DPM Poudel said preparations will be made in line with national development objectives for Nepal’s graduation from the least developed country (LDC) category by 2026 and to meet the Sustainable Development Goals (SDGs) by 2030. The government also plans to introduce innovative financial instruments to attract private investment in high-yield development projects, while promoting alternative financing for projects of national priority.
To improve the delivery of social security programs, all such schemes will be integrated with the national ID system to eliminate duplication. The government will also address legal and procedural obstacles related to land ceiling regulations, forest area usage, tax incentives, and profit repatriation, in order to improve the investment climate.
Despite existing constitutional provisions and government guidelines, ward-level programs continue to operate under federal jurisdiction. This raises doubts about the government’s ability to implement the proposed reforms effectively.
Paudel further stated that recommendations from the High-Level Economic Reform Advisory Commission would be implemented gradually. A new asset management company will be established to manage and monetize non-banking assets, added Paudel. Additionally, a digital bank will be launched to help reform Nepal’s capital market infrastructure.
To reduce the country’s reliance on foreign employment, the government will focus on creating domestic job opportunities.
According to DPM Paudel, special incentive programs will be introduced to encourage returning migrant workers to contribute their skills, capital, and technology to national development.
“The agriculture sector will also be a focus, with plans to mechanize and commercialize production to enhance productivity and ensure food security. Existing subsidies will be reviewed and restructured to make them production-based, while organic and indigenous farming practices will be promoted,” he said.
