Govt spends 78% of annual budget, Capital expenditure stuck at 40%

KATHMANDU: The Nepal government has been able to spend only 78% of its total annual budget allocation in the current fiscal year 2025/26 (FY 2082/83), with capital expenditure remaining significantly low at just 40% despite the government entering the final days of the fiscal year.

According to data from the Office of the Financial Comptroller General (FCGO), the government spent Rs 1.531 trillion out of the total budget allocation of Rs 1.964 trillion by Wednesday, July 9 (Asar 24), one day before the deadline for making budget expenditures.

The annual budget for the current fiscal year was presented by former Finance Minister Bishnu Prasad Paudel with an allocation of Rs 1.964 trillion. However, even after implementation under three finance ministers — Paudel, Rameshore Khanal and current Finance Minister Dr. Swarnim Wagle — the government’s development spending has remained far below expectations.

Capital expenditure, which directly supports infrastructure development and economic growth, has recorded the weakest performance. The government has spent only 40% of the allocated capital budget so far.

According to FCGO data, the government had allocated Rs 407.88 billion for capital expenditure, but only Rs 163.17 billion had been spent by Asar 24. The spending represents just 40% of the total capital budget allocation.

Low capital expenditure has remained a persistent challenge for Nepal, as delays in project execution, procurement hurdles, land acquisition issues and administrative bottlenecks often prevent development budgets from being fully utilized.

Since infrastructure development, including roads, bridges, energy projects and other public construction activities, falls under capital expenditure, poor utilization of this budget is often considered an indicator of slower economic activity and weaker public investment.

In contrast, recurrent expenditure has shown significantly better performance. The government has spent 87.25% of its recurrent budget by the same period.

The government had allocated Rs 1.180 trillion for recurrent expenditure, out of which Rs 1.030 trillion has already been spent.

Recurrent expenditure mainly covers government operational costs, including salaries, allowances, administrative expenses and regular service delivery. Such expenditures generally achieve higher utilization rates as they involve fixed and mandatory payments.

Meanwhile, expenditure under financial management has reached 90.17% of the allocated amount.

Financial management includes activities related to public debt management, including raising internal and external loans and repaying government liabilities.

The government had allocated Rs 375.24 billion under financial management, of which Rs 338.36 billion has been utilized by Wednesday.

Economists have repeatedly raised concerns over Nepal’s weak capital spending capacity, arguing that low development expenditure limits economic expansion, reduces employment generation and delays infrastructure completion.

Despite setting ambitious targets through annual budgets, Nepal’s governments have consistently struggled to translate budget allocations into actual development spending, particularly during the final months of the fiscal year when expenditure often accelerates without adequate project progress monitoring.