KATHMANDU: The interim government led by Prime Minister Sushila Karki has announced plans to cut thousands of scattered and politically motivated projects included in the current fiscal year 2025/26 budget.
Finance Minister Rameshwar Khanal, who assumed office on Monday, said a significant portion of the budget, pushed through under pressure from top leaders and lacking feasibility, would be scrapped to free up funds. According to him, eliminating fragmented projects could generate as much as Rs 100 billion to support urgent reconstruction and election expenses.
The move could especially affect projects under the Ministry of Urban Development, Physical Infrastructure, and Energy and Water Resources, many of which overlap with provincial and local jurisdictions.
For FY 2025/26, the Urban Development Ministry alone received Rs 118.34 billion for 6,755 projects and programs. Of these, over 760 projects were allocated budgets of less than Rs 1 million each. Most of the ministry’s approved projects are under Rs 10 million, with many costing under Rs 1 million.
The annual program book shows strong political influence. For example, nearly 1,398 projects in Kathmandu district were pushed by senior leaders including KP Sharma Oli, Sher Bahadur Deuba, Pushpa Kamal Dahal, and former finance minister Bishnu Poudel. Likewise, 245 projects were centered in Jhapa, 154 in Rupandehi, 138 in Chitwan, 118 in Gorkha, and 77 in Dadeldhura, districts closely tied to influential leaders.
Officials say these politically concentrated projects are the most likely to face cuts as part of the government’s resource management strategy.
Urban Development Ministry spokesperson Narayan Prasad Mainali, however, said they have not yet received formal instructions from the Finance Ministry. “We have only heard informally about the plan to cut fragmented projects. Once we receive a circular, we can determine which projects will be affected,” he explained.
He added that the selection process would be complicated, as some low-budget projects have already been completed or conditionally transferred to local governments.
“The Finance Ministry may set criteria, whether based on project size, lack of DPR or feasibility study, or political duplication, but until then, we cannot say which projects will be scrapped,” Mainali noted.
The Finance Ministry is expected to issue an official directive soon, which will determine the scale and scope of budget cuts.
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