KATHMANDU: The National Planning Commission (NPC) has advised the Ministry of Finance to significantly scale back or discontinue non-performing and troubled projects, citing the likelihood of resource constraints in the upcoming fiscal year 2082/83 BS (2025/26).
In a report prepared following discussions on budget formulation policies and programs for the coming fiscal year, the NPC warned of mounting pressure on sectors with mandatory obligations and stressed the need to halt projects that are deemed ineffective or problematic.
“There is little prospect of a significant improvement in revenue mobilization in the upcoming fiscal year. Foreign grants have been steadily declining over the past few years, and the disbursement of foreign loans has not matched the commitments made,” the report states.
In light of these projections, the Commission recommends prudent measures to manage the limited fiscal resources available.
The NPC has already proposed that the federal budget for the upcoming year be prepared within a ceiling of Rs 1,965 billion.
The report highlights that the share of current and mandatory expenditures in the national budget has been rising steadily.
Key expenditure drivers such as public debt servicing (principal and interest payments), employee salaries, and social security allowances continue to exert increasing pressure on budget formulation. This growing burden, the report notes, necessitates a reduction in development project allocations.
Furthermore, ongoing reconstruction efforts in the aftermath of the Jajarkot earthquake and the September 2024 water-induced disasters have added to the fiscal strain. The need to allocate additional resources for social security and health insurance schemes has also affected the prioritization of budgetary allocations.
According to the NPC, the prioritization of financial obligations created by various ministries and government bodies has further restricted the space for resource mobilization in other sectors, making it even more imperative to re-evaluate and streamline national expenditure plans.
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