An Open Letter to Finance Minister Wagle on Nepal’s Planned Development and Budget Process

The implementation of the National Project Bank and Project Classification Criteria in Nepal’s planned development and budget formulation processes is expected to bring significant changes to the budgeting procedure. For economic prosperity, it is essential to effectively deploy financial instruments such as public-private partnerships, loans, grant-mixed loan investments, and project bonds. The restructuring and capacity enhancement of institutions like the Municipal Development Fund, Infrastructure Development Bank, and Nepal Investment Board are imperative for infrastructure development. The Government of Nepal extends its heartfelt congratulations and best wishes for a successful tenure to Honorable Finance Minister Wagle. It is anticipated that under your leadership, Nepal will progress towards achieving planned development, improved budgeting, infrastructure advancement, and overall prosperity.

Nepal’s first Five-Year Plan, initiated in 1956 (2013 BS), targeted an investment of NPR 33 million, whereas the seventh plan set an investment target of NPR 2.9 billion. Until 1990 (2046 BS), development projects heavily relied on internal resources and foreign grants, with combined internal and external loans amounting to approximately NPR 7 billion. Currently, the nation’s internal debt stands at NPR 1.348 trillion and external debt at NPR 1.53 trillion, totaling nearly NPR 2.9 trillion. From the eighth to the sixteenth plan, the sixteenth plan’s investment target is set at NPR 9.4 trillion, expecting investments from the public sector of NPR 3.025 trillion, the private sector NPR 6.725 trillion, and cooperatives NPR 265 billion.

To realize economic prosperity through more effective public debt utilization and the deployment of financial investment instruments, several recommendations are put forward. The successful implementation of the “Project Classification Basis and Criteria 2080” and the “National Project Bank (Operation and Management) Criteria 2081,” introduced by the National Planning Commission, will require the active participation of the Ministry of Finance, Planning Commission, provincial governments, and provincial planning commissions. This will fully pave a new path in the budget formulation process.