The country’s interim government has moved swiftly to respond to the massive devastation triggered by the September 8–9 Gen-Z movement, which claimed 74 lives and caused losses amounting to nearly half the country’s GDP. The Finance Ministry has introduced a package of economic relief alongside strict austerity measures. Businesses hit hard by arson and looting will receive customs and excise duty exemptions to replace destroyed equipment, concessional loans for rebuilding, and tax deductions for verified losses. Insurance companies are required to settle 50 percent of insured claims, and a Payroll Protection Scheme will help firms retain employees. Tourism, one of the most affected sectors with losses exceeding Rs 25 billion, will receive special support, and companies replacing vehicles can access funding of up to 80 percent.
No perks, no frills: Finance Minister Khanal takes tough road o...
Alongside relief measures, the government has tightened expenditure. Discretionary and luxury spending has been halted, new projects suspended, and poorly justified projects scrapped. Employment is limited to essential technical personnel, temporary employees have been dismissed, and personal secretarial positions eliminated except at the top level. Auto allowances have been reduced to the bare legal minimum, overseas missions scaled back, and government buildings and vehicles insured. Offices have been instructed to recycle furniture and equipment, conserve power and water, and avoid costly rentals. These measures, introduced by Finance Minister Rameshwor Khanal, aim to prevent wastage, free up resources for rebuilding damaged infrastructure, and maintain key services such as health and education without cuts. Nepal has long struggled with unnecessary spending by ministries and government agencies, including budgets stretched across scattered projects with minimal public benefit, lavish allowances for officials, and costly foreign travel. These habits have slowed national development, strained federal budgets, and hindered major infrastructure projects. The new measures, though strict, send a clear message: the state will spend where necessary and avoid unnecessary expenditures.
Gen-Z protesters called for action against wastage and corruption, and this represents the first serious attempt to respond to those demands. Ending distribution-based schemes, halting unnecessary hiring, and requiring competitive bids for projects above Rs 1 million will help prevent public funds from being squandered. Placing the Revenue Investigation Department and the Money Laundering Investigation Department under the Finance Ministry is a significant move that can improve coordination and enforcement against financial crimes. For a government tasked with conducting elections by March 5, 2026, these steps are ambitious and welcome. Finance Minister Khanal has shown that austerity need not paralyze public projects; rather, it reallocates funds from excess spending toward reconstruction. The savings generated from these measures can be invested in rebuilding infrastructure and restoring public trust. The real test for the government, the ministry, and Minister Khanal will be implementing these decisions on the ground rather than leaving them on paper. If the caretaker government succeeds in generating real savings and advancing tangible reconstruction, it will leave a stronger platform for the next elected government.
