Finance Minister Wagle seeks ‘Flagship’ projects for budget, Eyes PPP model and market-based financing

KATHMANDU: Nepal’s government is preparing to unveil a set of high-impact “flagship” development projects in the upcoming national budget, with Finance Minister Biswo Nath Paudel initiating a selection process aimed at driving structural economic transformation and long-term growth.

According to officials at the Ministry of Finance Nepal, ministries and public agencies have been directed to submit project proposals aligned with predefined criteria, focusing on economic impact, implementation readiness, and capital requirements. Several institutions have already submitted detailed concept notes and reform-linked project recommendations.

Focus on Growth-Driving Sectors

Sources indicate that the Finance Minister is prioritizing projects capable of acting as “economic drivers,” with targeted sectors including information technology, physical infrastructure, urban development, education, and healthcare.

The goal is to identify a limited number of high-visibility, high-impact projects that can signal policy direction, crowd in investment, and accelerate economic activity—particularly at a time when Nepal faces slowing revenue growth and rising fiscal obligations.

Multi-Source Financing Strategy

In a shift from traditional budget financing, the government is preparing to adopt a diversified funding model for these flagship projects. This includes public investment, Public-Private Partnerships (PPP), and market-based instruments such as development bonds.

Officials say the government is exploring mobilizing domestic liquidity—currently concentrated in the banking system and stock market—toward long-term infrastructure financing. This approach aligns with global trends in infrastructure financing, where governments leverage capital markets and private sector participation to reduce fiscal pressure.

Selection Criteria: Readiness and Economic Impact

Project selection is expected to be based on three core parameters: strategic necessity, capital size, and implementation readiness. Preference will likely be given to projects that have already undergone feasibility studies, environmental assessments, or were showcased in recent investment summits.

This indicates a move toward execution-focused budgeting, rather than announcing new projects without preparatory groundwork—a long-standing criticism of Nepal’s public investment planning.

Beyond Traditional Budget Framework

Notably, the selected projects may be implemented under a non-traditional, non-budgetary framework, allowing for greater flexibility in financing and execution. This could help bypass constraints associated with annual budget cycles and limited fiscal space.

Given the pressure on government revenue and increasing expenditure commitments, authorities are also emphasizing efficient utilization of public funds and leveraging private capital to sustain development momentum.

Strategic Shift in Fiscal Policy

Economists view this initiative as part of a broader shift toward results-oriented fiscal policy, where fewer but more impactful projects are prioritized over a large number of fragmented schemes.

If executed effectively, the flagship project approach could improve capital expenditure efficiency, enhance investor confidence, and create multiplier effects across Nepal’s economy.

The final selection of projects is expected to be reflected in the upcoming budget announcement, which is likely to set the tone for Nepal’s economic strategy in the coming fiscal year.