Only 9 of 74 Economic Measures Fully Implemented in FY 2025/26 Budget

An independent study has found that the implementation of programmes announced for the economic sector in the budget for the current fiscal year (FY 2025/26) has remained sluggish.

According to the Budget Watch report released by the Confederation of Nepalese Industries (CNI), only nine out of 74 key measures related to the economic sector included in the current budget had been fully implemented by mid-January.

The study shows that 45 measures had made partial progress, while 20 saw no progress at all during the review period. Of the 27 measures related to the industrial sector, five were fully implemented, 14 partially implemented, and eight recorded zero progress. In the energy, infrastructure and urban development sector, only three of the 14 measures were fully implemented, while eight showed partial progress and three remained unimplemented. In agriculture and herbal production, three out of seven measures were fully implemented.

Compared to the same period of the previous fiscal year, the overall implementation performance has further weakened. While 13 percent of budget measures had been fully implemented during the corresponding period last year, the figure declined to 12 percent this year. However, the report notes some improvement in the second quarter compared to the first quarter, with full implementation rising from just 2 percent in the first quarter to 12 percent in the second.

The report highlights zero progress in plans to commercially produce and export natural and mineral-based products, citing a lack of work on the required legal provisions. Similarly, the plan to introduce time-based electricity tariffs for industrial and household consumers has seen no progress due to delays in revising electricity tariff rates.

Efforts to connect solar and wind energy projects to the national grid and sign power purchase agreements (PPAs) have also stalled, as necessary amendments to regulations have not been made. Meanwhile, the flagship programme to construct 100,000 residential buildings and apartments for employees across all seven provinces has achieved only partial progress.

One area showing notable improvement is the forestry sector, which has traditionally been a major bottleneck for infrastructure projects. The requirement for re-measurement while granting forest land use permits has been removed. Following the approval and publication of the Third Amendment to the Forest Regulation, 2023 in the Nepal Gazette, the process of tree felling for projects located in national forest areas has been simplified. The report categorises this reform as fully implemented.

Speaking at a public–private dialogue programme organised by CNI in Kathmandu on Monday, Physical Infrastructure and Transport Ministry Secretary Keshav Kumar Sharma said the government remains positive about bringing the private sector into infrastructure development. He noted that Nepal’s geographical conditions make infrastructure construction costly, adding that the government is willing to provide incentives to attract private investment.

Sharma attributed delays in project implementation to inadequate budget allocation. “There is a tendency to introduce programmes without proper prioritisation,” he said, adding that although demand for construction of new roads has surged in recent years, sufficient funds have not been allocated for the maintenance of existing roads. According to him, while the government had allocated road maintenance budgets of Rs 6–7 billion a few years ago, only Rs 4.28 billion was set aside this year despite inflation and an increase in road length, making nationwide road maintenance increasingly difficult.

At the programme, Independent Power Producers’ Association Nepal (IPPAN) President Ganesh Karki said the government has issued hydropower licences but failed to move forward with PPAs. He said that although the government made a commitment to sign PPAs for 5,000 MW, no progress has been made. “The private sector is ready to invest in all types of infrastructure, but the government should not block PPAs,” he said.

Nepal Infrastructure Bank (NIFRA) Chief Executive Officer Ram Krishna Khatiwada said the bank has ample liquidity, but legal constraints have hindered investment. He urged the government to amend laws and adopt new policies to mobilise available capital, adding that infrastructure could be a strong sector for investment.

Khatiwada also hinted that budget implementation often weakens when politically motivated programmes are included to serve narrow interests.

CNI President Birendra Raj Pandey stressed the need for effective implementation of budget. “When it comes to implementation, performance is extremely weak, which is deeply discouraging,” he said. According to him, effective budget execution would boost capital expenditure, help achieve stated targets, support policy reforms and contribute to overall economic growth. “That is why successful and effective budget implementation is critically important,” Pandey said.