KATHMANDU: Economic experts have expressed skepticism over the effectiveness of Nepal’s budget for the upcoming fiscal year 2025/26, arguing it is unlikely to resolve the country’s prevailing economic challenges.
At an interaction program titled “Budget 2025/26: Review and Implementation”, organized by the Nepal Intellectual Organization, Kathmandu District Committee, experts said the budget was introduced under difficult economic circumstances but lacks the necessary reforms and strategies to drive recovery.
Dr. Ramesh Paudel, former member of the National Planning Commission, noted that although the budget may not appear technically flawed, it fails to introduce any meaningful policy departure.
“This was an opportunity for the two-thirds majority government to take bold policy steps. At a time when public trust in the government and budget is waning, this budget should have aimed to rebuild confidence,” he said. “By including only what’s realistically doable, the government could have strengthened credibility.”
Dr. Paudel also criticized the government for failing to adopt a progressive tax policy. He pointed out that the budget does not increase non-tax revenue, revise income tax thresholds, or raise the capital gains tax rate.
He added that current tax policies disproportionately benefit the wealthy while placing a heavier burden on the urban middle class. He further highlighted the lack of a clear plan to formalize the large informal economy and plug revenue leakages.
Economist Prof. Dr. Surya Thapa said that although the budget claims to prioritize employment generation and poverty reduction, it lacks concrete plans to back those claims. However, he acknowledged that the size of the budget, along with the economic growth and inflation targets, appeared to be grounded in realism.
“If properly implemented, the Rs 1.964 trillion budget could achieve 6% economic growth and keep inflation within the targeted 5.5% range,” Thapa said. He criticized the introduction of the “take or pay” model in hydropower projects, calling it an unwise move.
Former Planning Commission member Dr. Chandrakant Paudel said the budget is status quo-oriented and lacks clear strategies to address existing economic problems.
“It is neither bold nor realistic. There’s no basis in the budget for achieving the revenue targets or significantly increasing capital expenditure,” he said.
He highlighted the need to immediately initiate a second phase of economic reforms and called for better coordination between fiscal and monetary policies to manage inflation and stabilize the economy.
Economist Dr. Nar Bikram Thapa described the budget as status quoist and incapable of solving current economic issues. He highlighted major concerns over the sources of financing and poor implementation capacity.
Dr. Thapa also pointed out that no meaningful effort has been made to shift from an import-dependent revenue system to a production-based economy. He criticized the scattering of budget allocations across numerous small-scale programs and the failure to reduce recurrent expenditures.
He further accused the government of indirectly reviving the controversial MP Development Fund in the budget and questioned the realism of both revenue and expenditure projections for the coming fiscal year.
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