Budget Watch: 27 Percent of Programs Related to Economy and Private Sector Left Unimplemented in FY 2024/25

 

More than a quarter of budget programs linked to the economy and private sector remained unimplemented in the last fiscal year, according to a new study.

The Budget Watch report, published on Sunday by the Confederation of Nepalese Industries (CNI), shows that 27 percent of the 63 major economic and private-sector-related budget commitments in Fiscal Year (FY) 2024/25 were not implemented at all. The fourth edition of the report found that only 25.4 percent (16 programs) were fully implemented, while 47.6 percent (30 programs) saw partial implementation.

Sector-wise, out of 14 commitments in industrial development, three were fully implemented, seven partially, and four not at all. In agricultural transformation, two out of nine were fully implemented, five partially, and two not implemented. Of 19 commitments in information technology development, only two were fully and three partially implemented, while the rest were left unaddressed. In the energy sector, one out of two commitments was fully implemented and the other partially. In tourism promotion, two of five provisions were implemented, two partially, and one not at all. In tax system reform, three of seven provisions were implemented, three partially, and one not implemented. Infrastructure and entrepreneurship-related commitments, however, remained entirely incomplete.

CNI said the report was aimed at revitalizing the sluggish economy and laying the foundation for the government’s ambition of transforming Nepal into a USD 100 billion economy.

At the report launch, Chief Secretary Ek Narayan Aryal stressed the need for the private sector to be transparent and ethical. He warned against unhealthy competition, saying businesses often flock to areas with high returns, forcing others to shut down. While 98 percent of businesses maintain good practices, he added, the actions of a small minority tarnish the reputation of the entire private sector.

Aryal urged businesses to cooperate with the government in upholding ethics and suggested that policies and laws should ensure that once citizens have a national ID number, other requirements such as Know Your Customer (KYC) forms will no longer be necessary.

Physical Infrastructure and Transport Secretary Keshav Kumar Sharma highlighted the heavy involvement of the private sector in infrastructure projects, citing cable cars, energy, and cement industries as success stories. However, he noted that the road sector had not been commercialized. Despite 63 percent of the capital budget being spent in FY 2024/25, progress in the physical infrastructure sector stood at 74 percent, he said.

Commerce Secretary Ram Prasad Ghimire said the government is working on strategies for comparative and competitive products. He stressed that budget execution challenges should be considered during the planning stage itself.

CNI President Birendra Raj Pandey said the government must adopt a stricter approach to budget execution. “While the budget and programs are often well-designed, implementation remains weak. Of the 63 key points related to the economy and private sector in last year’s budget, 27 percent (17 programs) saw no implementation at all,” Pandey said. He argued that Nepal’s current USD 44 billion economy could be expanded to USD 100 billion with proper execution.

Former CNI President Hari Bhakta Sharma called for reforms in three key areas. He argued that laws should be simplified, outdated and overlapping provisions removed, and unnecessary documentation requirements reduced. He stressed that national ID and citizenship documents should suffice across all institutions. Sharma also noted that despite reductions in interest rates by banks and financial institutions in the current fiscal year, the private sector has not been motivated to invest, citing volatility in interest rates as a barrier to long-term investment.

Meanwhile, CNI noted that the current FY 2025/26 budget contains 74 commitments across seven key sectors related to the economy and private sector. These include 27 provisions for industry, 14 for energy, infrastructure, and urban development, nine for tourism, six for information technology and innovation, seven for agriculture and herbs, eight for investment and finance, and three for education and employment.