The private sector has urged the government to prepare work plans with clear timelines to ensure the effective use of capital expenditure, which has consistently shown poor performance almost every year.

Submitting recommendations for the upcoming budget for the Fiscal Year 2025/26 to the Ministry of Finance on Monday, the Nepal Chamber of Commerce (NCC) advised the government to introduce measures for the efficient utilization of funds allocated to development projects. NCC President Kamalesh Kumar Agrawal said the private sector has called on the government to assess capital expenditure performance on a quarterly basis.

Highlighting slow capital expenditure as a major factor eroding investor confidence, two other umbrella organizations - the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and the Confederation of Nepalese Industries (CNI) - also emphasized the need for government action. In pre-budget discussions held last week, both FNCCI and CNI urged the government to prioritize the effective use of public spending.

Poor capital expenditure has remained a persistent problem. In fiscal year 2023/24, the government spent only about 61 percent of the allocated Rs 302 billion. Notably, Rs 50 billion of this was spent in the final month of the fiscal year.

Since construction and infrastructure projects are crucial for economic growth and job creation, low capital expenditure has a significant negative impact on overall economic progress. With just two months remaining in the current fiscal year, the government has spent only 33.58 percent of the Rs 352.35 billion allocated for development projects, according to records from the Financial Comptroller General Office (FCGO).

The umbrella organizations also urged the government to maintain policy stability from the next fiscal year to foster a conducive environment for investment and business. They proposed that the government declare 2025-2035 as the “Investment Decade” to attract more foreign direct investment.

According to the private sector, the budget should prioritize agriculture, tourism, energy, employment generation, and production growth - key drivers of economic prosperity. They also called for good governance through the extensive use of information technology to reduce growing frustration among youth and to encourage them toward entrepreneurship.