Budget Size to Range Between 22 and 22.5 Trillion; ‘Physical and Digital Highways’ Prioritized

The government is preparing to introduce a budget ranging from 22 to 22.5 trillion rupees for the upcoming fiscal year, prioritizing physical and digital infrastructure. The budget will include extensive amendments to value-added tax, income tax, and customs laws, aiming for significant reforms in the tax system. Additionally, the government plans to declare the information technology sector as a national strategic industry and reduce the federal government’s administrative structure by 30%.

Kathmandu, 29 May — Focusing primarily on physical and digital infrastructure, the government is set to present a substantial budget for the forthcoming fiscal year. Earlier, a resource committee led by the vice-chairperson of the National Planning Commission had set the budget ceiling at 18.9 trillion rupees. However, Finance Minister Dr. Swarnim Wagle is planning to propose a budget three to three and a half trillion higher than that amount, according to sources. The previous election government had set this year’s budget at just under 19 trillion rupees.

The Medium-Term Expenditure Framework (MTEF), updated based on the current fiscal year’s budget, had provided room for a budget up to 21.28 trillion for the next fiscal year. Nonetheless, budget ceilings have been kept modest in recent years due to resource constraints. This year, the finance ministry sources indicate that the minister is pursuing a strategy to fully utilize the available fiscal space.

While the current fiscal year’s budget aimed to collect 14.8 trillion rupees in revenue, the revised estimate projects actual collections of 12.98 trillion rupees. For the next fiscal year, the federal government has set a limit to raise up to 5.5% of the total Gross Domestic Product (GDP) in domestic debt, allowing it to raise up to 3.63 trillion rupees in internal borrowing.