KATHMANDU, Feb 12: More than a quarter of the government’s budgeted economic programs recorded no progress in the first half of the current fiscal year 2025/26, reflecting sluggish capital spending and weak implementation.
A report on budget implementation unveiled by the Confederation of Nepalese Industries (CNI) shows that 27 percent of programs related to economic sectors remained untouched as of mid-January. Of the 74 budget headings under economic sectors, only nine were fully implemented, while 45 recorded partial progress during the review period.
The situation was similarly weak in energy, infrastructure and urban development. Out of 14 programs initiated in these sectors, only three were fully implemented, eight saw partial progress and three registered no progress.
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The report comes at a time when the overall capital expenditure remains low. Between mid-July 2025 and mid-January 2026, the government spent only 11.66 percent of the allocated capital budget of Rs 407.89 billion.
Ram Krishna Khatiwada, chairman of CNI’s Infrastructure Committee, said private sector investment depends heavily on government spending. “The private sector currently invests around four rupees for every Re 1 invested by the government. Entrepreneurs are discouraged from investing unless the government increases capital injection,” he said at a program in Kathmandu.
Government officials acknowledged structural weaknesses in budget formulation. Keshav Kumar Sharma, secretary at the Ministry of Physical Infrastructure and Transport, said inadequate project preparation remains a key reason for poor capital spending.
“The government struggles almost every year to utilize allocated funds. Even projects included in the project bank lack sufficient preparation,” Sharma said.
Last year, the Ministry of Finance directed government agencies to propose only projects listed in the National Planning Commission’s project bank. The directive required inclusion of only well-prepared and feasible projects backed by cost-benefit analysis.
However, the government deviated from the guideline while preparing the current fiscal year’s budget. As a result, several small and unproductive projects received allocations. Many of them were later scrapped by the government formed after the Gen Z movement.
