Nepal’s economic plan: frugal budget, private sector synergy unveiled

KATHMANDU: Nepal’s government has unveiled plans for a frugal budget in the upcoming fiscal year, prioritizing fiscal restraint and private sector collaboration to navigate resource constraints. Announced through its policy and program, the strategy signals sharp public spending cuts and enhanced public-private partnerships (PPPs), aiming to stimulate economic growth and streamline governance. The move has sparked optimism in the private sector, with Finance Minister Bishnu Paudel emphasizing business-friendly reforms.

The government plans to eliminate redundant programs, merge unnecessary structures, and cancel non-viable infrastructure projects. “Projects lacking progress or feasibility will be replaced with high-impact initiatives,” the policy document stated. This reprioritization aims to address past inefficiencies by reforming development models and fostering a results-driven culture. Unproductive projects may face the axe, ensuring budget allocations focus on measurable outcomes.

A key focus is deepening ties with the private sector, particularly in infrastructure development. “PPPs will drive sustainable economic growth,” the policy noted, highlighting plans to involve private capital in physical infrastructure. To create a business-friendly environment, the government will introduce policy reforms and simplify procedures, building on its pro-private sector stance. Transferring underperforming public enterprises to private hands or monetizing them further underscores this shift, a move likely to attract investors.

Tax system reforms are also on the horizon, with plans to enhance tax administration through IT integration and adopt a taxpayer-friendly revenue framework. Reports from the High-Level Economic Reform Advisory Commission and the Tax System Reform Committee will guide these changes, expected to gain traction next year. These reforms aim to boost Nepal’s economic competitiveness and attract foreign direct investment.

The budget will prioritize job creation, youth entrepreneurship, and sectors like agriculture, tourism, energy, education, and health. Agricultural modernization, including a groundbreaking policy allowing agricultural projects as loan collateral, is set to receive significant funding.

Tourism will see investments in new destinations and infrastructure, while energy initiatives will accelerate hydropower and alternative energy projects. Education and health programs will focus on quality and access, with unified health insurance and standardized school curricula proposed. Targeted youth employment and poverty alleviation programs are also planned, addressing Nepal’s 19% poverty rate.

However, the policy’s repetitive priorities—agriculture, tourism, energy, and education—raise concerns about implementation. Farmers still grapple with shortages, community schools decline, and private healthcare remains out of reach. Recurring promises, like rail and water transport development tied to Prime Minister KP Sharma Oli’s vision, have seen slow progress. The water transport office and lagging rail projects are likely to receive funding, but their impact remains uncertain.

Analysts warn that weak execution could undermine these ambitious goals. “The priorities are sound, but implementation is the bottleneck,” said an economic expert. With 19% of Nepalis below the poverty line, effective delivery is critical to drive economic and social progress.

The government’s focus on private sector synergy and fiscal discipline offers hope, but stakeholders urge transparency and accountability to ensure tangible results. As Nepal gears up for a transformative budget, the nation watches closely to see if these promises translate into action.