With just four days remaining before the government closes its payment system for the fiscal year 2080/81, Nepal has utilized only 47.69 percent of its capital (development) budget. Despite allocating NPR 352.35 billion for capital expenditure this fiscal year, only NPR 166.22 billion has been spent as of Asar 20 (July 5), according to the Office of the Financial Comptroller General.
The capital budget, which accounts for only 18 percent of the total budget, is crucial for infrastructure and development activities such as roads, irrigation, hydropower, airports, and water supply. However, the government’s failure to utilize even this modest allocation is raising serious concerns about its efficiency, planning, and execution capabilities.
Compared to last year’s capital spending of 49.63 percent by the same time, this year’s performance marks a further decline. Despite the urgent need for investment in development projects, low resource availability, bureaucratic delays, and inefficiencies have contributed to this underperformance.
Experts and stakeholders, including Rabi Singh, President of the Federation of Contractors’ Associations of Nepal, have criticized the government for its inability to manage project implementation and ensure timely payments. “There is a resource crunch,” Singh stated. “Government agencies are looking for ways to avoid making payments, and even contractors under the strategic road network haven’t been paid.”
The government’s fiscal struggle is compounded by high liabilities in salaries and social security, with current expenditure consuming over 82.51 percent of its budget. Out of NPR 1.14066 trillion allocated for current expenses, NPR 941.17 billion has already been used. In contrast, capital expenditure continues to lag far behind.
So far, 76.38 percent of the total budget of NPR 1.8603 trillion has been spent. This imbalance between current and capital spending reflects structural weaknesses in fiscal governance and development prioritization.
A five-year trend shows that capital expenditure allocation has consistently remained below 20 percent, with marginal increases over time:
- FY 2077/78: 19.12%
- FY 2078/79: 16.50%
- FY 2079/80: 16.51%
- FY 2080/81: 17.25%
- FY 2081/82: 18.94%
Even after federalism, which was expected to improve budget execution and decentralize development spending, capital budget utilization remains disappointing. Though tenders are now being issued earlier in the fiscal year, spending is still concentrated at the year’s end—a long-standing practice that results in poor-quality implementation and rushed disbursement.
Adding to the challenge is a resource shortfall, as only 75 percent of the revenue target has been met by the same date, forcing the Ministry of Finance to revise its budget expectations in the mid-term review. With rising obligations and insufficient revenue, Nepal is facing a two-fold crisis—low capital allocation and even lower spending efficiency.
This persistent problem threatens the country’s development trajectory, undermines public trust in the government’s ability to deliver, and highlights the need for urgent reforms in budget planning, execution, and financial discipline.
