Highlights of Nepal’s Rs 1.964 Trillion Budget for FY 2025-26: A Roadmap for Growth and Prosperity

Kathmandu, Nepal – On May 30, 2025, the Government of Nepal unveiled its ambitious Rs 1.964 trillion budget for the Fiscal Year 2025-26 (2082/83 BS), marking a 5.6% increase from the previous year. Presented by Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel, this record-breaking budget aims to drive economic growth, enhance infrastructure, and promote social justice. Here’s a detailed breakdown of the budget’s key highlights, priorities, and sectoral allocations. #NepalBudget2025 #NepalEconomy #FiscalYear2026

Budget Breakdown: Where the Money Goes

The Rs 1.964 trillion budget is strategically allocated across three main categories to ensure sustainable development and fiscal responsibility:

• Current Expenditure: Rs 1.180 trillion (60.1%) for salaries, administrative costs, and operational expenses. #GovernmentSpending

• Capital Expenditure: Rs 407.89 billion (20.8%) for critical infrastructure and development projects. #InfrastructureDevelopment

• Financial Management: Rs 375.24 billion (19.1%) for debt servicing and financial obligations. #FiscalManagement

Additionally, Rs 417.83 billion is allocated for fiscal transfers to provincial and local governments, reinforcing Nepal’s federal structure. These funds, distributed through revenue sharing, equalization grants, and performance-based grants, aim to promote balanced regional development and efficient public service delivery. #FederalNepal #LocalGovernance

Core Objectives and Priorities

The budget outlines five core objectives to transform Nepal’s economy:

1. Achieving sustainable, high, and inclusive economic growth focused on poverty alleviation.

2. Promoting entrepreneurship and job creation through expanded investments.

3. Enhancing economic capacity with modern technology.

4. Ensuring social justice through robust social protection systems.

5. Delivering citizen-friendly public services and good governance.

The seven key priorities include fostering entrepreneurship, boosting quality infrastructure, improving health and education, achieving balanced regional development, strengthening social security, ensuring efficient public services, and implementing anti-corruption measures. #EconomicGrowth #SocialJustice #GoodGovernance

Groundbreaking Policy: Nepali Investment Abroad

In a historic move, the budget allows Nepali businesses and individuals to invest abroad, a first since private sector domestic investment was permitted in 1991/92. Businesses can now invest up to 25% of their annual export earnings in foreign markets, particularly for establishing sales branches or processing factories. At least 50% of foreign profits must be repatriated to Nepal, with the Investment Board Nepal (IBN) overseeing approvals. Individuals with expertise in technology or services can also earn sweat equity shares in foreign companies. This policy aims to globalize Nepal’s private sector and boost economic competitiveness. #NepalInvestment #GlobalBusiness

Empowering the Private Sector

The government positions the private sector as a key driver of economic prosperity. Key measures include:

• Reduced rental fees in Special Economic Zones (SEZs) and rent exemptions for the first three years for industries in SEZs and industrial areas.

• Concessional loans at a 3% interest rate for startups focused on innovation and emerging technologies.

• Simplified procedures for foreign investment and profit repatriation.

• Industries exporting over 30% of their production from industrial areas will receive SEZ-level facilities. #PrivateSector #StartupsNepal #SEZ

Sectoral Allocations: Building a Strong Foundation

The budget prioritizes key sectors to address Nepal’s developmental needs:

• Education (Rs 211.17 billion): Expanding virtual learning, creating a digital learning portal, establishing a teacher bank, and offering free visas to attract foreign students. #EducationNepal

• Health (Rs 95.81 billion): Expanding burn treatment facilities, introducing AI and robotic healthcare, increasing health insurance funding to Rs 10 billion, and providing free treatment for non-communicable diseases and cancers. #HealthcareNepal

• Infrastructure (Rs 151.99 billion for Physical Infrastructure and Transport): Allocating Rs 2.449 billion for the Kathmandu-Terai Expressway, completing Nagdhunga and Siddhababa tunnels, and transforming Tribhuvan International Airport into a boutique airport. #InfrastructureNepal

• Energy and Irrigation (Rs 86.01 billion): Adding 942 MW of hydropower, constructing 732 km of transmission lines, and irrigating 14,000 hectares. #HydropowerNepal

• Agriculture (Rs 57.48 billion): Targeting rice self-sufficiency in two years, increasing fertilizer subsidies to Rs 28.82 billion, and promoting organic farming. #AgricultureNepal

• Information Technology: Offering a 75% tax exemption on IT service exports, abolishing VAT on digital transactions, and establishing an AI center. #ITNepal #DigitalNepal

Addressing Challenges

Finance Minister Paudel acknowledged structural challenges, including political instability, high trade deficits, and limited foreign capital inflow. The budget aims to tackle these through governance reforms, anti-corruption measures, and enhanced project monitoring via a national dashboard. #EconomicChallenges #GovernanceReform

Private Sector Response

The private sector cautiously welcomed the budget, appreciating measures like SEZ incentives and IT tax exemptions. However, concerns remain about implementation challenges due to political instability and corruption risks. Economists have called the growth and revenue targets ambitious, urging robust execution. A key private sector demand—removing the 13% VAT on air tickets—was not addressed, potentially impacting tourism. #PrivateSectorNepal #TourismNepal

A Vision for a Prosperous Nepal

The FY 2025-26 budget reflects Nepal’s commitment to building a prosperous, inclusive, and equitable nation. By prioritizing economic growth, infrastructure, and social justice, the government aims to break barriers and instill hope among Nepalis. #HappyNepalis #ProsperousNepal #NepalDevelopment

You may also like:

Shark Tank Nepal: A New Chapter in Nepal’s Entrepreneurial Landscape

Nepal's business ecosystem is about to witness an exciting transformation with the arrival of Shark Tank Nepal. This globally renowned Read more

Ritu Singh Vaidya – From Runway to Boardroom

When entrepreneurs step into the Shark Tank Nepal, they face a panel of the country's most successful business minds. Among Read more

Shark Tank Nepal’s First Season with Star-Studded Investment Panel

Huge news for Nepal's startup scene - Shark Tank is finally here! They've just announced their first-ever panel of Sharks, Read more

Shark Tank Makes Its Way to Nepal: A New Chapter for Entrepreneurship

In an exciting development for Nepal's business landscape, Himalaya TV is set to introduce the country's own version of the Read more