Capital Expenditure Reaches Only 32.53% of Annual Target in First 11 Months of Fiscal Year

KATHMANDU: Nepal’s capital expenditure, a key indicator of infrastructure and development spending, has reached only 32.53 percent of its annual target in the first 11 months of the current fiscal year, highlighting persistent challenges in public project implementation and budget execution.

According to the latest daily budgetary report published by the Office of the Financial Comptroller General (FCGO), the government spent NPR 132.66 billion on capital expenditure during the first 11 months of the fiscal year 2082/83.

The government had allocated NPR 407.88 billion for capital expenditure in the current fiscal year, meaning less than one-third of the development budget has been utilized despite only one month remaining before the fiscal year ends.

The sluggish pace of spending raises concerns about delays in infrastructure projects, public works, and development programs, which are crucial for economic growth, job creation, and investment mobilization.

Recurrent Spending Nears 77 Percent

In contrast to weak capital spending, recurrent expenditure has continued at a relatively faster pace.

The government had targeted recurrent spending of NPR 1.18 trillion during the fiscal year. As of the first 11 months, recurrent expenditure reached 76.91 percent of the annual allocation.

Recurrent spending includes government salaries, pensions, administrative expenses, grants, and operational costs of public institutions.

Economists have frequently expressed concern that Nepal’s budget execution remains heavily tilted toward recurrent expenditure while development spending continues to lag, limiting the government’s ability to stimulate economic activity through public investment.

Financial Management Spending Crosses NPR 305 Billion

Similarly, expenditure under the financial management category has reached a significant portion of the annual target.

The government allocated NPR 375.24 billion for financial management in the current fiscal year. By the end of the first 11 months, spending under this heading stood at NPR 305.71 billion.

Financial management expenditure primarily includes debt servicing, principal repayments, investments, and other financing-related obligations.

Pressure Mounts for Last-Month Spending Surge

With only one month remaining in the fiscal year, government agencies are under increasing pressure to accelerate project implementation and improve budget absorption.

Historically, Nepal witnesses a sharp rise in capital expenditure during the final weeks of the fiscal year as ministries and government agencies rush to utilize allocated budgets. However, experts have repeatedly warned that last-minute spending often compromises efficiency, quality, and value for money.

Low capital expenditure has remained a recurring challenge for Nepal’s public finance management system, reflecting issues such as delayed procurement processes, land acquisition hurdles, contractor performance problems, environmental clearances, and bureaucratic bottlenecks.

Implications for Economic Growth

The slow pace of development spending comes at a time when Nepal is seeking to accelerate economic growth, improve infrastructure, attract investment, and create employment opportunities.

Economists argue that stronger capital expenditure is essential to boost construction activity, support industries linked to infrastructure development, increase private-sector confidence, and generate multiplier effects across the economy.

As the fiscal year enters its final month, attention will be focused on whether government agencies can significantly increase capital spending or whether another year of underperformance in development expenditure will weigh on Nepal’s economic ambitions.