CNI concludes third 'CNI Budget Watch' for FY 2025/26; finds weak capital spending

KATHMANDU: Confederation of Nepalese Industries (CNI) on Monday concluded its third 'CNI Budget Watch' programme for fiscal year 2025/26, continuing the initiative to monitor and improve government budget implementation in the infrastructure and energy sectors.

Organised in collaboration with the Society of Economic Journalists – Nepal (SEJON), the programme featured a mid‑year assessment of progress on 74 items listed in CNI’s Budget Watch booklet. SEJON President Bhagwat Bhattarai presented a study showing that by the end of the second quarter, nine items were fully implemented, 45 showed partial progress, and 20 had recorded no progress.

The SEJON report highlighted weak capital expenditure, noting that government capital spending reached only 12% by the second quarter, the weakest level in the past decade, excluding the earthquake year and its aftermath. The study pointed to poor implementation in ministries with the largest capital allocations, particularly Physical Infrastructure, Energy and Urban Development. Of 14 items tied to energy, infrastructure and urban development, only three were fully implemented, eight showed partial progress, and three had no progress.

Speaking as chief guest, Ministry of Physical Infrastructure and Transport Secretary Keshab Kumar Sharma said the problem lies in the budget formulation process itself and called for structural change. “To bring about radical improvement in the state of budget implementation, the very structure of Nepal's budget formulation must be changed,” he said, adding that projects should be entered into the Project Bank only after preliminary preparations are complete to avoid non‑implementation.

Representatives from the energy sector raised concerns about policy clarity and written commitments. Independent Power Producers' Association, Nepal (IPPAN) President Ganesh Karki said the removal of the ‘take and pay’ provision in this year’s budget has not been confirmed in writing and noted that while the budget aimed to initiate Power Purchase Agreements in the solar sector, only some progress has been made. He also warned that the Electricity Regulatory Commission’s Guidelines on Open Access to Electricity Transmission and Distribution, 2082, lack clarity over implementation.

CNI Infrastructure Committee Chair Ram Krishna Khatiwada urged the government to lead with public spending to attract private investment. “While the government spends Re 1, the private sector is spending Rs 4. However, as long as the government does not spend, the private sector is not encouraged to invest,” he said.

Addressing the programme, CNI President Birendra Raj Pandey expressed disappointment that many private sector suggestions are included during budget formulation but fail to translate into effective implementation. “Many policy suggestions from the private sector are included in the budget, which excites us; however, when the stage of budget implementation arrives, it remains extremely weak. This disappoints us,” he said.

The event was attended by CNI Vice President Rohit Gupta, Director General Ghanashyam Ojha and other industry and policy stakeholders. Organisers said the Budget Watch will continue to monitor quarterly progress and press for reforms to the budget formulation process to improve delivery on infrastructure and energy commitments.