Nepal Fiscal Deficit 2081/82: Revenue Shortfall, Development Spending Crisis
17th May 2025, Kathmandu
Nepal is facing a growing fiscal challenge. The government’s spending has surged this year, but revenue collection has failed to keep up. As a result, the national budget has slipped into a deficit of over Rs. 209 billion in the fiscal year 2081/82.
Nepal Fiscal Deficit 2081/82
Government Spending Rises Sharply
The government announced a total budget of Rs. 1.86 trillion for the current fiscal year. By mid-May, it had already spent Rs. 954 billion. That’s over 62% of the total budget.
Most of this spending has gone toward day-to-day operations. Recurrent expenditure has reached Rs. 778 billion out of the Rs. 1.14 trillion allocated for it. This accounts for more than 68% of the target.
Revenue Collection Below Expectations
Meanwhile, revenue collection has lagged. The target was to raise Rs. 1.419 trillion from taxes and other income sources. However, the government has collected only Rs. 927 billion so far. That’s just 65% of the goal.
This shortfall in revenue has directly contributed to the rising budget deficit.
Development Budget Remains Underused
Capital or development spending continues to struggle. The government allocated Rs. 352 billion for development projects. But it has used only Rs. 121 billion — just 34.44% of what was planned.
Many infrastructure projects are still delayed. This slow pace has raised concerns among financial analysts and policy experts.
Drop in Foreign Aid
Foreign grants were also expected to support the budget. The government had targeted Rs. 52.32 billion in grant aid. Unfortunately, only Rs. 16.13 billion has been received to date. That’s barely 30.83% of the target.
This drop in foreign aid has added more strain on the national budget. Without external support, development funding has become harder to manage.
Financial Management and Loan Payments
The government had also allocated Rs. 367 billion for financial management. This included interest payments and investments in state-run enterprises. Of that, Rs. 264 billion has already been spent.
Unlike development funds, this part of the budget has remained relatively stable.
Mid-Year Budget Cuts
Earlier in the fiscal year, Finance Minister Bishnu Prasad Paudel revised the national budget. His team reduced nearly 10% of the allocated funds. The changes came after a review of programs introduced by the previous finance minister, Janardan Sharma.
The current government said that many earlier programs lacked sustainable funding sources.
Ministries Struggle to Spend Allocated Funds
The Ministry of Physical Infrastructure and Transport received one of the largest budgets this year. However, it has faced many obstacles in spending the funds.
Secretary Keshav Kumar Sharma of the ministry said that full budget utilization is nearly impossible. According to him, problems with the tender process are a major cause of delay.
He explained that even approved projects run into issues. Delays in shifting utilities, a shortage of construction materials, and contract disputes often hold things back.
Only 40% of the Infrastructure Budget Spent
This ministry alone had requested Rs. 180 billion from the government. It received Rs. 150 billion. So far, it has spent about 40% of its budget. Some payments are still pending.
Sharma added that they have set a goal of achieving 50% physical progress this year. However, he admitted that reaching that number will be challenging.
Experts Urge Better Budget Discipline
Economists and budget experts have raised concerns about this trend. They believe that without better planning and faster execution, Nepal’s economic growth could suffer.
Low capital spending means fewer new roads, schools, or hospitals. It also means fewer jobs and slower development in rural areas.
Government watchdogs have called for reforms in project planning and procurement. They recommend setting realistic timelines and removing red tape.
What Lies Ahead?
With only a few months left in the fiscal year, the government must act quickly. Boosting revenue collection and speeding up development work are top priorities.
The Ministry of Finance must also improve coordination among government departments. Delays caused by bureaucracy and inefficiency must be addressed.
Nepal cannot afford to miss development targets again. Continued underspending on infrastructure could weaken long-term economic stability.
Conclusion
Nepal’s fiscal position in 2081/82 paints a mixed picture. Recurrent spending is on track, but development remains slow. Revenue collection is below target, and foreign aid has declined. Together, these factors have pushed the country’s fiscal deficit to Rs. 209 billion.
If the government wants to improve this situation, it must focus on timely project execution, effective budgeting, and stronger revenue strategies. Nepal’s growth depends not just on how much money is allocated — but how effectively it is spent.
For more: Nepal Fiscal Deficit 2081/82
