A recent forum at Tribhuvan University (TU) raised serious concerns about how well the new national budget will actually be carried out and the ongoing loss of government revenue due to weak enforcement and illegal trade.

Kathmandu, June 5
A post-budget forum hosted by the Economics Students’ Society at Tribhuvan University brought together experts from government, business, and academia to analyze the new national budget for the upcoming fiscal year.

While some panelists appreciated the budget’s progressive policies, many raised concerns about how well those plans will actually be put into action, ongoing financial mismanagement, and large gaps in tax collection due to Nepal’s informal economy.

The budget for the fiscal year 2025/26 is set at Rs 1,964.11 billion, with 60% for regular government spending, 21% for infrastructure projects, and 19% for financial arrangements like debt payments.

Government’s Take
Shyam Prasad Bhandari from the Finance Ministry defended the high level of regular spending, saying much of it funds local infrastructure projects through fiscal transfers, even though it's labeled as "recurrent expenditure."
He admitted tax losses at the Indian border but argued there’s still room for productive investment.

He also pointed out some economic wins, such as Nepal achieving self-sufficiency in eggs and making good progress in paddy production, thanks to better irrigation.

Business Sector’s Concerns
Anjan Shrestha from the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) said that despite the private sector contributing over 80% to GDP, it faces serious challenges due to unstable policies and a lack of trust.

He urged the government to quickly implement recommendations from a reform advisory panel, criticizing delays in turning new laws into workable regulations.
He also warned that the shadow economy is growing, allowing unchecked imports to hurt legitimate businesses and government revenue.

Shrestha questioned the government’s plan to borrow Rs 3 billion from the domestic market, asking how the private sector is supposed to compete for funding if the government dominates the credit market.

Expert Voices
Dr. Kalpana Khanal from the Policy Research Institute criticized the habit of creating overambitious budgets without secured funding, which leads to mid-year spending cuts.
She welcomed the new Rs 30 million minimum size for federal projects as a way to improve planning but warned that border revenue leakages remain a serious issue.

Khanal also pointed out that revenue collection was higher during the COVID-19 lockdowns, when human interference was minimal—suggesting significant losses occur during “normal” times due to weak enforcement.

She advised that foreign aid should only go to well-prepared projects with completed feasibility studies.

Academic Perspective
Prof. Dr. Ram Prasad Gyanwali, head of TU’s Economics Department, praised the budget for showing signs of better financial discipline.
He supported raising the age for senior citizen allowances to 70, calling it a bold but necessary move.

Gyanwali highlighted the increased capital spending, from Rs 352 billion last year to Rs 407 billion this year, saying it could boost jobs and economic growth.

He also commended incentives for the IT sector, such as:

Lowering the export tax to 5%

75% income tax waiver on IT exports

Full tax exemption for startups earning up to Rs 100 million annually for their first 5 years

Just 1% import tax on solar and wind energy equipment

In short: While the budget includes some positive steps, experts are worried about weak implementation, revenue loss due to smuggling and the informal economy, and the gap between bold plans and actual results.

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