Budget is balanced despite implementation challenges: NCC

KATHMANDU: Nepal Chamber of Commerce (NCC) has stated that the government’s budget for fiscal year 2025/26 is, on balance, sound, though its implementation will be challenging.

The NCC said in a statement that the revenue target of Rs 1,315 billion and the foreign loans and grants targets (Rs 233 billion in loans and Rs 55.45 billion in grants) will be difficult to meet unless economic activity expands, given evolving global conditions.

The budget is focused on facilitating trade, promoting industrial investment and boosting private sector confidence. It excludes projects below Rs 30 million and prioritises sectors such as information technology and tourism. The NCC noted measures including the abolition of VAT on digital payments, an allocation of Rs 760 million at 3% interest to deter youth migration and a five‐year income tax exemption for startup businesses with an annual turnover of up to Rs 100 million.

Other initiatives include the establishment of digital banks, opening up to foreign investment, infrastructure development and support for tourism. The NCC also acknowledged proposals for systematic urbanisation with private sector participation, measures to facilitate land acquisition for collective housing and support for businesses through working capital loans and loan rescheduling.

The NCC expressed confidence in an export strategy aimed at goods with comparative and competitive advantages, certification of Nepal’s quality standards and the use of potential construction materials. It also called for policies to manage the underutilised forest sector sustainably.

Additional measures noted were the integration of Know Your Customer (KYC) details with the national ID card, tax exemptions for machinery used in green hydrogen production and wood seasoning, and reforms in the cooperative and financial sectors, including amendments to credit and insolvency laws. The NCC has stressed the need for a monetary policy that targets 6% economic growth while keeping inflation at 5.5%.