Private sector welcomes Nepal’s budget with optimism

KATHMANDU: Nepal’s private sector has cautiously welcomed the NPR 1.964 trillion budget for the fiscal year 2082/83 (2025/26), presented by Finance Minister Bishnu Prasad Paudel during a joint session of the Federal Parliament on Thursday. While praising its pro-private sector measures, industry leaders emphasized that the budget’s success hinges on effective implementation, a recurring challenge in past years.

Chandra Prasad Dhakal, President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), expressed satisfaction that many of the organization’s recommendations were incorporated. “The budget places the private sector in the driver’s seat, fostering collaboration. It feels more promising than previous budgets,” Dhakal told reporters at the parliament premises. He highlighted provisions like tax exemptions for IT and startups, the abolition of the NPR 300,000 bank guarantee for EXIM codes, and plans to upgrade Bhrikuti Mandap for international conference halls as positive steps.

However, Dhakal cautioned that implementation remains a weak link. “Budgets often look good on paper, but their impact depends on execution. The government must act responsibly,” he said, noting that ambitious revenue targets, including NPR 13.15 trillion, seem challenging. He also endorsed the budget’s proposal for an Assets Management Company to address rising non-performing loans in banks and called for implementing recommendations from the High-Level Economic Reform Commission.

Dhakal expressed disappointment over the lack of personal income tax rate reductions or expanded tax exemptions, which could have boosted middle-class purchasing power and market activity. He also supported raising the social security allowance eligibility age to 70, a suggestion from the FNCCI, to balance fiscal priorities.

Kamlesh Agrawal, President of the Nepal Chamber of Commerce, described the budget as balanced but stressed that its success depends on bureaucratic intent and implementation. “The budget is balanced amidst economic slowdown and rising state obligations. Current expenditure seems reasonable, but capital expenditure must break the trend of under-spending with strict deadlines to stimulate the economy,” Agrawal said.

He noted that while revenue targets appear balanced, the reliance on NPR 3.62 trillion in internal loans and NPR 53.45 billion in foreign grants is ambitious and risks liquidity issues. Agrawal urged the government to align the budget with the upcoming monetary policy from the new central bank governor. “Economic growth requires synergy between the budget and monetary policy. Flexible policies on credit and working capital are crucial to meeting the 6% growth target,” he added.

Both leaders emphasized that without honest implementation, the budget’s provisions—such as tax relief for IT, tourism, and green energy, and support for infrastructure and digital payments—may fail to address the economic slowdown or energize businesses facing idle capital in banks. The private sector’s cautious optimism underscores the need for coordinated policy execution to achieve the budget’s ambitious goals.