Govet to prioritize physical infrastructure, digital economy in upcoming budget

KATHMANDU: The Government of Nepal is preparing to unveil a national budget focused on developing physical infrastructure and building a digital economy in the upcoming fiscal year 2024/25. Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel presented the Principles and Priorities of the Appropriation Bill to both houses of the Federal Parliament, highlighting key reforms to align with the vision of Digital Nepal.

According to the principles outlined, the government aims to introduce legal reforms and expand digital infrastructure to achieve the goals of a digitized national economy. To this end, programs will be introduced to encourage private sector investment in the information and communications technology (ICT) sector. Industries within the ICT space with high export potential will be further incentivized, with a focus on ensuring public services are delivered more efficiently, affordably, and in a citizen-friendly manner.

National Pride Projects and Large Infrastructure to Be Prioritized

The government has committed to completing ongoing national pride projects and large-scale infrastructure works as a matter of top priority. According to the framework, budget allocations will favor high-return, well-prepared, and bank-listed projects, while development assistance from foreign partners will be mobilized based on national needs and priorities.

A new “readiness filter” will be implemented to ensure projects are executed within the specified time, cost, and quality parameters. Resources will be strategically managed to maximize output from limited funds, with the government focusing on projects with high internal rates of return. Conversely, small, fragmented, redundant, and underfunded projects that require long completion periods will be reduced or discontinued. Ongoing projects may be reprioritized, restructured, or suspended as necessary.

To facilitate project execution, the government will streamline processes related to forest land use, land acquisition, and other bureaucratic bottlenecks. Additionally, public transportation services will be improved to be safe, accessible, and environmentally friendly.

Urban Development and Energy Sector Reform in Focus

The government will encourage private investment in sustainable and integrated urban infrastructure, particularly through new city development initiatives. Building codes will be updated and implemented to support organized housing projects.

Public debt will be deployed primarily in nationally prioritized, high-return projects, ensuring sustainability in debt usage. To manage fiscal stability, revenue mobilization will be enhanced.

To meet electricity demand during dry seasons, reservoir-based hydropower projects will be prioritized, with incentives to mobilize private capital in hydropower generation and transmission. The government also plans to expand domestic and cross-border transmission lines, promote solar energy development in line with a balanced energy mix, and modernize the electricity distribution system to improve reliability.

Domestic electricity consumption will be boosted, and excess power will be exported as part of a broader energy trade strategy.

Tourism, Coordination Among Government Tiers, and Financial Tools

To boost tourism’s contribution to the national economy, promotional programs will be implemented alongside the development of religious, cultural, adventure, and sports tourism infrastructure. The number of high-quality tourists and their length of stay will be increased. Newly built airports will be operated at full capacity, and aviation safety systems will be strengthened.

The budget emphasizes coordinated development across federal, provincial, and local governments, promoting collaboration among the public, private, cooperative, and community sectors. The constitutionally defined roles of all three tiers of government will serve as the core framework for budget formulation.

To narrow the existing investment gap in development projects, the government plans to mobilize private capital using innovative financial instruments. Sources for nationally prioritized potential projects will be arranged through alternative development financing mechanisms.

Reforms to Revitalize the Economy

The budget framework states that legal, institutional, and procedural reforms will be introduced to energize the economy, with regulatory bodies in the financial sector receiving a strengthened mandate. Favorable conditions will be created to promote private investment. Nepal will also prepare to graduate from the least developed country category by 2026 and meet the Sustainable Development Goals (SDGs) by 2030.

Recommendations from the High-Level Economic Reform Commission will be gradually implemented. A more effective one-stop service system will be established to enhance the ease of doing business, and the use of ICT will be expanded to improve citizen access to public services.

Integration between public service delivery systems will be improved through the National ID card and Nagarik App platforms. Governance and transparency will be strengthened to combat corruption, while efforts will be made to raise the morale of civil servants and restore public confidence in state institutions.

Youth Employment, Agriculture, and Social Protection

Finance Minister Paudel announced policy measures to encourage youth involvement in agriculture through group and contract farming systems. Modern, technology-based farming will be promoted, and financial access for commercial agriculture will be made easier.

To reduce reliance on foreign employment, the government will focus on creating jobs within the country. Returnee migrant workers will be supported through programs that leverage their skills, capital, and technology for national development.

Social protection programs will be redesigned to target the economically and socially disadvantaged more effectively and equitably.

The government will also promote new technologies to enhance productivity and support emerging high-potential economic sectors. Health insurance programs will be restructured for efficiency, and startup businesses based on domestic raw materials will receive incentives and promotional support.