Implementation of Budget Measures Remains Weak

Only 2.4 percent of the private sector recommendations related to the economy, included in the current fiscal year’s budget, were fully implemented in the first quarter, according to a report prepared by the Confederation of Nepalese Industries (CNI).

The ‘Budget Watch’ report, released by CNI on Tuesday, found that out of 74 economy-related points across seven sectors, 51 percent showed zero progress, while 46 percent were partially implemented.

The report highlighted that the Gen Z movement, changes in priorities following the formation of the new government, and lack of inter-ministerial coordination affected the implementation of budget measures. It also noted increased budget cuts for unprepared, fragmented, and low-priority projects, leaving execution of some programmes uncertain.

Plans categorized under ‘zero progress’ include programmes that have not yet started, budgets of the previous government that the current administration has not adopted, and programmes limited to announcements. Programmes with ‘partial progress’ involved discussions, meetings, or legal frameworks being drafted, but concrete implementation had only just begun.

One of the zero-progress items relates to land acquisition. The budget had proposed revising laws to allow industries, farms, and housing projects to acquire land beyond prescribed limits, and to permit the sale of completed housing units previously blocked due to land restrictions. However, with the dissolution of the House of Representatives while the Land Bill was under consideration, these measures have not been implemented.

The report also noted partial implementation of measures aimed at promoting foreign direct investment, including developing Nepal as a top investment destination, promoting investments with potential partner countries, signing double taxation avoidance agreements, simplifying profit repatriation, and attracting foreign investment in national priority sectors.

Only a few economy-related budget points have been fully implemented. Among them, the facilitation of testing and inspection services for goods at commercial sites by officially selected business personnel during export processes has been carried out.

The report expressed optimism that ongoing policy reforms by the new government could lead to positive outcomes in the next quarter.