Nepal’s Ministry of Finance unveiled the half-yearly budget assessment report in the mid-year review of the budget for the current fiscal year 2025-26. The budget is reduced to 1688.32 billion from 1964.11 billion.

 

The government has revised downward both revenue and expenditure, following the Gen Z movement, which forced the interim government to take austerity measures until a new government is elected by the people. Re-estimations and prioritisation of the projects were done, and the Cabinet decided to cut expenses, which became the basis for the revised estimate. The government had initially presented a budget of Rs 1,964.11 billion for the current fiscal year, of which Rs 1,180.98 billion was allocated for current expenditure, Rs 407.88 billion for capital expenditure, and Rs 375.24 billion for fiscal management.

 

According to the revised estimates, current expenditure has been reduced to Rs 1,125.97 billion, capital expenditure to Rs 243.30 billion, and fiscal management to Rs 319.04 billion. With the current changes, the total size of the budget has been revised to Rs 1,688.32 billion, which is 85.96 percent of the original allocation. Overall, the budget has been downsized by 14.06 percentage points.

 

Of the total tax revenue, direct taxes are estimated at Rs 407.03 billion and indirect taxes at Rs 918.55 billion. Accordingly, direct taxes constitute 30.70 percent of total tax revenue, while indirect taxes account for 69.30 percent. 

 

The report states that current expenditure has increased due to the upcoming Nepal’s House of Representatives election costs, social security cost, employee dearness allowances, and relief to be given to the families of those injured and deceased in protests.

 

According to the reports,  the main priorities of expenditure have been set on the reconstruction of physical structures damaged by the Gen Z movement, payment for strategic projects under construction, and mandatory obligations like salary, allowance, pension, etc. High priority has been given to the necessary budget for the security agencies and the Election Commission, for conducting the House of Representatives election to be held on March 5.