Nepal’s 75-year budget history enters a new chapter as RSP govt prepares ambitious Rs 2.2 trillion fiscal plan

KATHMANDU: Nepal today stands at a historic fiscal crossroads as Finance Minister Dr. Swarnim Wagle prepares to unveil the national budget for fiscal year 2083/84, marking not only the first budget of the ruling Rastriya Swatantra Party (RSP)-led government but also another defining moment in the country’s 75-year budgetary history.

The annual budget, scheduled to be presented at 4:00 PM before a joint session of the Federal Parliament, is expected to total nearly Rs 2,2 trillion (Rs 22 kharb), significantly exceeding the ceiling recommended by the National Planning Commission and positioning itself among Nepal’s most ambitious fiscal blueprints.

Coming at a time when public expectations are soaring around the reform-oriented RSP government, the budget is expected to blend administrative restructuring, digital transformation, tax reform, and economic modernization with politically sensitive decisions, including a large-scale voluntary retirement scheme for government employees.

Inside the Ministry of Finance at Singha Durbar, preparations continued through the night on Thursday, underscoring the significance of what government insiders describe as a “transformational budget.” Officials worked until the early hours of Friday morning to finalize the document.

According to ministry sources, Finance Minister Wagle, together with the Finance Secretary, Revenue Secretary, and top officials from the Customs Department and Inland Revenue Department, finalized tax rates and core fiscal provisions around 3:00 AM Friday. The ministerial team reportedly left the ministry only around 4:00 AM, after sending the final budget draft for printing.

Officials involved in budget preparation, including staff from the Budget Division and senior bureaucrats, remained stationed overnight to complete the extensive fiscal framework. By Friday morning, most core budget officials had returned to the ministry for final coordination, while general staff were granted leave.

For Nepal, the upcoming budget carries unusual political and historical significance. Since the country introduced its first formal budget 75 years ago by Suberna Sumsher Rana, annual fiscal plans have largely been dominated by traditional political parties. This year’s budget, however, represents the first major fiscal intervention under the leadership of the RSP, a political force that rose to prominence promising governance reform, institutional accountability, digital public services, and economic restructuring.

One of the most consequential proposals expected in the budget is a voluntary retirement scheme targeting government employees, aimed at restructuring Nepal’s bureaucracy and reducing long-term administrative inefficiencies.

According to sources at the Ministry of Finance, the government plans to offer retirement packages to civil servants who have completed 30 years of service or reached 55 years of age, while ensuring retirement eligibility remains within the existing legal cap of 58 years under the Civil Service Act.

The proposal could affect approximately 12,000 civil servants, potentially creating an immediate fiscal liability exceeding Rs 28 billion.

Officials estimate that employees opting for retirement would receive lump-sum pension commitments alongside compensation for accumulated leave benefits. Since civil servants are entitled to payments for up to 180 days of home leave and accumulated sick leave benefits, the financial burden is expected to rise substantially.

Government calculations indicate that extending an average employee’s service period by around three years before retirement would result in roughly Rs 17.28 billion in pension liabilities alone, based on an average monthly pension estimate.

The financial obligation becomes even more significant when factoring in compensation for unused leave. Many employees traditionally preserve accumulated leave entitlements throughout their careers. A civil servant with 30 years of service, for example, can receive the equivalent of nearly 12 months of salary in sick leave compensation upon retirement.

Assuming an average monthly salary exceeding Rs 50,000, including annual grade increments, the government may need to allocate nearly Rs 10.80 billion solely for leave-related compensation to the targeted workforce.

Combined liabilities for pensions and accumulated leave payments are projected to exceed Rs 28.08 billion, although officials acknowledge that recent salary increases could push the final cost even higher.

Nepal has previously attempted similar reforms but retreated due to fiscal pressures. Six years ago, the government considered voluntary retirement measures but hesitated after calculating the enormous pension obligations involved.

Under the Employee Adjustment Act 2074, the government had sought applications from civil servants aged above 50 who were unwilling to adjust into federal, provincial, or local government structures. At the time, 9,672 employees, including four secretaries, had applied for voluntary retirement. However, concerns over financial liabilities ultimately stalled implementation.

Beyond civil service reform, this year’s budget is expected to include major revisions to Nepal’s tax system, investment climate, digital economy strategy, and public spending priorities.

For investors, businesses, and development stakeholders, today’s fiscal announcement could offer the clearest signal yet of whether the RSP government intends to fundamentally redefine Nepal’s economic direction—or merely reshape the country’s long-standing fiscal traditions under a new political banner.