Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: Nepal’s Finance Minister Rameshwar Prasad Khanal has urged the removal of double taxation on retirement funds, stressing that Nepali taxpayers continue to bear a disproportionate tax burden. He made the remarks during the 36th anniversary celebration of the Citizen Investment Trust, highlighting the need for equity and policy simplicity in the country’s tax system.
Acknowledging that his tenure did not fully resolve the double taxation issue, Khanal said he would brief the incoming finance minister to ensure the matter is addressed. “Nepali taxpayers are facing a heavy tax burden. Policy reforms are essential to ease this pressure,” he noted.
Citizen Investment Trust: A Model of Institutional Resilience
Khanal recalled that the Citizen Investment Trust was established during the interim government and, unlike many financial institutions that weakened or merged over time, it has grown steadily to its 36th year. He also referenced Agricultural Development Bank, which required multiple government bailouts before stabilizing, highlighting ongoing structural challenges in Nepal’s financial sector.
Political Transition and Economic Outlook
Khanal indicated that a new government is expected within a week, after the Election Commission Nepal distributes certificates to the elected representatives. He said he is preparing to step down from his ministerial role in the coming weeks.
On economic policy, Khanal emphasized the importance of open competition. “Competition should not be feared. Markets must remain open, not closed,” he stated, calling for policies that encourage productivity and efficiency.
Liquidity Management and Long-Term Investment
Noting the abundance of liquidity in Nepal’s banks, Khanal stressed the need to channel deposits into long-term investment funds. He said the government has initiated mechanisms to issue 15–20 year long-term funds to absorb surplus liquidity and support strategic projects.
Infrastructure Projects and Policy Reforms
Highlighting efforts to prevent negative interest rates from low borrowing, Khanal mentioned upcoming large-scale projects such as the Budhigandaki Hydropower Project. He added that regulatory and policy barriers impeding project implementation have been partially removed, with remaining hurdles to be addressed gradually.
Risk Management Amid Global Uncertainty
While economic indicators appear positive, Khanal cautioned that Nepal’s real economy still faces challenges, particularly from geopolitical tensions in the Middle East, which could impact remittances and labor markets. He called for careful fiscal and monetary management to maintain stability during the post-election transition.
By focusing on tax reform, institutional strengthening, and strategic investment, Finance Minister Khanal signaled a commitment to equitable and sustainable economic governance for Nepal’s citizens and investors alike.
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