KATHMANDU, Feb 10: The government has downsized the annual budget for the current fiscal year (FY 2025/26) by 14.06 percent, cutting Rs 276 billion from the initially announced outlay of Rs 1.964 trillion.
Unveiling the mid-term budget review on Tuesday, the government cited slow capital expenditure, weak revenue collection, and low foreign loan realization as reasons for the revision. The revised budget now stands at Rs 1.688 trillion.
Budget downsizing during mid-term reviews has become a recurring trend. Last year, the government reduced the budget by Rs 168 billion (9.01 percent). Similarly, the budget for FY 2023/24 was slashed by 12.62 percent to Rs 1.530 trillion.
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Speaking at a program organized by the Ministry of Finance (MoF), Finance Minister Rameshore Khanal said the revision was aimed at maintaining fiscal discipline. “It reflects the government’s effort to implement the budget on a realistic and fundamental basis rather than a populist one,” he said.
Under the revised estimate, recurrent expenditure has been reduced to Rs 1.125 trillion, or 95.34 percent of the original allocation. Capital expenditure has been cut to Rs 243.30 billion (59.65 percent), while financial management expenditure stands at Rs 319.04 billion (85.02 percent). Previously, capital expenditure was set at Rs 407.89 billion and financial management at Rs 375.24 billion.
The government has also lowered its revenue target to Rs 1.315 trillion from Rs 1.480 trillion. According to MoF records, revenue collection in the first half of the fiscal year stood at Rs 581.40 billion against a target of Rs 711.20 billion.
The government has adopted austerity measures to curb unproductive spending. After assuming office, Finance Minister Khanal scrapped small and poorly prepared projects worth Rs 119.53 billion.
Khanal said the MoF has released Rs 42 billion for projects that have already entered the procurement process. “Currently, the government is prioritizing funds for reconstruction of infrastructure damaged during the Gen Z movement and meeting compulsory financial liabilities,” he said.
