Development Budget Spending Remains Below 11% After Six Months of the Fiscal Year

As nearly six months of the current fiscal year have passed, Nepal has failed to spend even 11 percent of its allocated capital (development) budget. According to the Ministry of Finance, by January 10 (Poush 26), the government spent only NPR 43.6 billion out of a capital budget exceeding NPR 400 billion, representing just 10.69 percent of the total allocation. In the same period last fiscal year, development spending stood at NPR 53.58 billion, or 15.21 percent, indicating a further decline in capital expenditure performance this year.

Ministry spokesperson Tank Prasad Pandey stated that capital expenditure was adversely affected by the Gen-Z movement, which disrupted the administrative mechanism for nearly one and a half months. He added that although challenges remain, the ministry has been facilitating implementing agencies and expects a noticeable improvement in development spending in the coming months. Pandey also noted that decisions taken regarding stalled and non-performing contracts, considering existing legal frameworks, are expected to have a positive impact on future infrastructure development.

Meanwhile, construction entrepreneurs have also acknowledged disruptions in development works. Ravi Singh, President of the Federation of Contractors’ Associations of Nepal, said that poorly selected and unproductive projects initiated in the past have created significant implementation challenges. He emphasized that unnecessary and unproductive projects should be terminated through mutual agreement between government offices and contractors as per the Public Procurement Act. Singh added that delays occur due to shortcomings on both the government and contractor sides, stressing that liability should be borne accordingly—through settlement of dues by offices or forfeiture of performance guarantees in cases of contractor fault. Despite ongoing blame-shifting between the government and contractors, meaningful efforts to address the core issues behind low development spending remain limited.