The government is giving priority to the development of reservoir-based hydro projects, aviation infrastructure, and digital advancement in the budget of the upcoming Fiscal Year 2025/26.

Presenting the ‘Principles and Priorities of the Budget of 2025/26’ at the joint session of the federal Parliament on Sunday, Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel said that the government aims to accelerate sustainable economic growth by adopting a productivity-driven development model. “Technological innovation, entrepreneurship, and investment in emerging sectors will be encouraged, alongside promoting a self-reliant and competitive economy aligned with the vision of a prosperous Nepal,” he said.

According to him, core guiding principles of the budget will be the implementation of constitution-guaranteed fundamental rights, building a strong economy for national prosperity, coordinated development, fiscal balance and budget discipline, private sector promotion and citizen-centric services with good governance.

According to the document of principles and priorities of the upcoming budget presented at the Parliament, reservoir-based hydro projects will be prioritised to meet dry-season demand. Domestic and cross-border transmission infrastructure will be developed, while solar energy and electricity exports will be supported.

Likewise, while the promotion of religious, cultural, adventure, and eco-tourism will be prioritised, operational capacity of completed airports will be enhanced, and legal arrangements for using forests and parks for tourism will be established. The new budget will emphasise the use of domestic raw materials, startup support, and promotion of local products. Export-oriented production, industrial infrastructure, and supply chains will be strengthened.

Similarly, the government will invest in digital infrastructure and attract private investment in ICT. E-governance services will be made simpler and more accessible while ensuring cybersecurity.

Priority to multi-sector reforms

Through the Appropriation Bill of the next year, legal, institutional, and procedural reforms will be continued to foster a business-friendly environment. Investment-related challenges, such as land ceiling issues, forest use, and tax inconsistencies, will be addressed, said DPM Paudel.

He said that strengthened collaboration among federal, provincial, and local governments, as well as between public, private, cooperative, and community sectors, will be emphasised for balanced and inclusive development.

Another principle would guide the budget in eliminating the irregularities and distortions that have been growing in the field of public finance. Capital allocations will prioritise well-prepared and high-yielding projects, while effective revenue mobilisation and responsible public debt management will be key strategies.

Public debt will be used in projects of national priority that yield high returns, ensuring sustainability.

Similarly, to reform the public service delivery, priority would be given to the rapid development of the ICT sector. Public services will be integrated through the National ID and Citizen App.

DPM Paudel said economic governance will be strengthened through the legal and regulatory reforms. Nepal will prepare for its graduation from the LDC category by 2026 and achieve Sustainable Development Goals (SDGs) by 2030, based on recommendations from the Economic Reform Commission.

“Programmes will be announced to develop skilled human resources based on market demand and promote self-employment through youth-focused entrepreneurship and technology use. Returnee migrants will be encouraged to invest their skills and capital locally,” he said. DPM Paudel also reiterated the pledge to mechanise and commercialise agriculture to increase productivity and food security.

Organic farming, safe produce markets, improved irrigation, and modern input supply systems will be promoted.

Development of skilled HR

In the social sector, quality and practical education and health services will gain importance. The federal government will collaborate with local governments to improve school management, and federal hospitals will expand their services.

Another priority area is human capital development. Through the document presented at the Parliament, the government said that the development of an entrepreneurial and skilled workforce will be promoted to maximise the demographic dividend through programmes enhancing knowledge, skills, and productivity.

The government also plans to announce programmes to uplift disadvantaged communities, such as women, Dalits, Muslims, and minorities. Likewise, youth development, women's economic participation, protection of children and the elderly, and support for people with disabilities will be prioritised.

Taking note of growing liabilities in for social security, a financially sustainable and integrated social security system will be developed, targeting vulnerable groups. Benefits will be linked to national identification records for transparency, according to DPM Paudel.

Project completion in priority

Likewise, the budget of the upcoming fiscal year will give priority to completing the national pride projects and large infrastructure works with high returns. “Time-bound and cost-effective project execution will be ensured with better land acquisition and forest-use coordination,” read the document. Overlapping and prolonged small projects will be reduced, and procurement-related legal complexities will be addressed.

The government also announced the implementation of climate adaptation and mitigation programmes. The budget will promote post-disaster reconstruction, and environmentally-friendly infrastructure.

Through the document, the government also pledged to attract private capital into high-return development projects through innovative financial instruments, implement investment-friendly tax policies, and boost the morale of security forces through necessary budget allocation.

By Modnath Dhakal