KATHMANDU, June 7: Economic experts have raised concerns that Nepal's upcoming fiscal budget will fail to address the country's pressing economic challenges.
At an interaction titled "Budget 2025/26: Review and Implementation" hosted by the Kathmandu District Committee of the Nepal Intellectuals' Organization, participants said the newly presented budget lacks the strength to resolve prevailing issues.
Dr Ramesh Paudel, former member of the National Planning Commission, criticized the two-thirds majority government for failing to propose a reform-oriented budget. "Technically, this budget may not seem controversial, but the government missed a critical opportunity for a policy departure," he said. "With declining public trust, the government should have used this budget to rebuild confidence. A practical and focused budget would have restored public belief on its own."
He further criticized the government for failing to introduce a progressive tax policy. According to him, the budget did not raise non-tax revenues, revise income tax thresholds, or increase capital gains tax rates. He argued that the current tax policy favors the wealthy while burdening the urban middle class.
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Dr Paudel also pointed out that the government has presented no concrete plan to formalize the large informal economy or to curb revenue leakage.
Economist Prof Dr Surya Thapa argued that while the budget claims to prioritize job creation and poverty reduction, it lacks clear plans to implement those goals. However, he acknowledged that the budget size, growth target, and inflation goals appear realistic rather than overly ambitious.
"If the government works effectively, it can implement the Rs. 1.964 trillion budget, achieve 6% economic growth, and maintain inflation within the desired 5.5% range," he said. He also criticized the inclusion of the "take or pay" model in hydropower projects, calling it inappropriate.
Dr Chandrakant Paudel, also a former Planning Commission member, described the budget as “status quoist.” He said it offers no clear roadmap to address existing economic problems. "This budget is neither substantial nor realistic. It lacks a solid basis to meet the revenue target and shows no clear plan to increase capital expenditure," he said.
He stressed the need to initiate a second phase of economic reform and called for better coordination between fiscal and monetary policies to stabilize the economy. He warned that failing to control inflation could severely affect the economy.
Dr Nara Bikram Thapa echoed similar concerns, calling the budget status quoist and ineffective. "The budget introduces no major changes in policies or tax rates. It fails to clearly identify priority areas for economic reform," he said.
He pointed out pressure on fiscal resources and weak implementation as major challenges. He also criticized the government for failing to shift from an import-driven revenue model and a distribution-heavy economic structure towards a more sustainable and productive system.
Dr Thapa added that the budget does not align with the 16th periodic plan's vision, scatters funding across too many programs, and fails to reduce recurrent expenses. He also accused the government of covertly reintroducing the controversial Constituency Development Fund. In his view, the revenue and expenditure estimates for the upcoming fiscal year lack realism.
