Economic experts have voiced serious concerns over Nepal’s newly presented fiscal budget for 2025/26, saying it lacks the vision and policy shifts needed to address the country’s worsening economic crisis.
At an interaction program titled “Budget 2025/26: Review and Implementation”, hosted by the Kathmandu District Committee of the Nepal Intellectuals’ Organization, economists and policy analysts warned that the budget fails to provide meaningful solutions or reforms.
Dr. Ramesh Paudel, former member of the National Planning Commission, criticized the two-thirds majority government for presenting what he called a “missed opportunity.”
“Technically, the budget may not appear controversial,” he said, “but the government failed to use it as a tool for policy departure amid declining public trust. A more practical and focused budget could have restored confidence.”
Dr. Paudel also criticized the lack of a progressive tax policy, noting that income tax brackets remained unchanged, non-tax revenues were not increased, and capital gains tax rates were untouched. According to him, the current tax structure disproportionately burdens the urban middle class while favoring the wealthy.
He further pointed out the absence of concrete plans to formalize Nepal’s vast informal economy or address revenue leakage—two areas critical to sustainable fiscal management.
Prof. Dr. Surya Thapa, another economist, observed a mismatch between the budget’s stated goals and its implementation framework.
“While the budget promises job creation and poverty reduction, it lacks operational clarity,” he said.
Still, he acknowledged that the budget size of Rs. 1.964 trillion, the 6% economic growth target, and the 5.5% inflation control goal are realistic—provided the government executes the plan efficiently.
However, Dr. Thapa strongly opposed the continuation of the “take-or-pay” model in hydropower contracts, calling it inappropriate and financially risky for the government.
Dr. Chandrakant Paudel, also a former member of the National Planning Commission, described the budget as “status quoist” and “unrealistic.”
“It lacks a clear roadmap for economic recovery. The capital expenditure plan is vague, and the revenue goals have no solid foundation,” he said.
He stressed the urgent need for a second wave of economic reforms and greater synergy between fiscal and monetary policies to prevent macroeconomic instability. He also warned that inflation, if left unchecked, could seriously harm the economy.
Dr. Nara Bikram Thapa echoed the criticism, saying:
“The budget does not outline any major reforms, nor does it revise tax policies or define priority areas for investment.”
He cited weak implementation capacity, fiscal stress, and excessive program scattering as major bottlenecks. He also criticized the government for clinging to an import-driven, consumption-heavy economic model instead of moving towards a productive, export-oriented system.
Dr. Thapa further alleged that the government is quietly reviving the controversial Constituency Development Fund, contradicting earlier promises of budget transparency.
“The projected revenue and expenditure estimates are not grounded in reality,” he said.
In summary, the expert panel concluded that while the budget may appear technically sound, it fails to deliver the depth, clarity, and strategic direction needed to address Nepal’s pressing economic issues.
