Nepal records lowest capital expenditure in FY2025/26: CNI Budget Watch

KATHMANDU: Nepal recorded its lowest capital expenditure in percentage terms in recorded history in fiscal year 2025/26, despite progress in legislative drafting, a joint report by the Confederation of Nepalese Industries (CNI) and the Society of Economic Journalists-Nepal (SEJON) said on Friday.

The report was released at a public-private dialogue in Kathmandu. SEJON President Bhagwat Bhattarai presented the Budget Watch findings. He said political instability, public protests and physical damage to official documentation severely impaired government operations during the first six months of the fiscal year. Although administrative momentum rose after general elections and the publication of a 100-point ministerial action plan, final figures showed capital spending fell to a six-year low in absolute monetary terms.

A monitoring review found that only 25% of tracked budget commitments for the private sector were fully executed by the end of the fourth quarter. A further 59% made partial progress, largely limited to procedural discussions and regulatory drafting, whilst 15% recorded no progress. Key initiatives, including start-up incubation centres, data facilities and IT park developments, remained in preliminary phases.

Looking ahead to fiscal year 2026/27, the joint initiative outlined 70 targeted budget provisions across major economic sectors. Priorities include 22 points in industrial development; 15 in energy and finance; 10 in tourism; 10 in agriculture and forestry; five in labour and health; five in legal reform; and three in technology and innovation.

The report emphasised that the strategic objective for the coming period centres on attracting private capital, raising energy consumption, boosting digital revenue tracking and establishing Nepal as an information technology export hub. Experts at the dialogue warned that the government’s principal challenge is to ensure policy announcements produce tangible economic results rather than remain unfulfilled pledges.