The latest report by the Confederation of Nepalese Industries (CNI) has revealed some uncomfortable facts regarding economic sector programmes. As of mid-January of the current fiscal year 2025/26, 27 per cent of programmes in the economic sectors had registered zero progress. Only nine of 74 government budget headings had recorded complete implementation. Forty-five had registered slow implementation, while the remaining had registered no implementation at all. The situation is no better in the energy, infrastructure and urban development sectors. Of 14 government programmes implemented in these sectors, three had achieved full implementation, eight had recorded partial implementation, and three had registered zero implementation. This is not merely a matter of slow implementation. It points to major problems in government spending, which remains very low. Between mid-July 2025 and mid-January 2026, the government spent only 11.66 per cent of its capital budget of Rs 407.89 billion.
Recurrent spending spikes, capex rising steadily
Ram Krishna Khatiwada of the CNI explained that the private sector invests four rupees for every one rupee spent by the government, while Keshav Kumar Sharma of the Ministry of Physical Infrastructure and Transport said projects were not properly prepared. Although the Ministry of Finance had instructed all agencies to undertake only well-prepared projects included in the National Planning Commission’s project bank, the directive was not followed. Many small and unproductive projects were included, some of which were later cancelled following political changes triggered by the Gen Z movement. The lack of progress affects the entire economy. When capital projects stall, jobs are not created. Contractors wait and workers remain idle. Loan applications decline, and revenue collection suffers because economic activity slows. Meanwhile, the state continues to spend heavily on salaries, pensions and routine administrative costs. Why does this happen repeatedly? Several factors contribute. Project planning is weak, with projects often included in the budget without proper feasibility studies, land acquisition, environmental approval or cost-benefit analysis. Political pressure is another factor, as leaders seek to appease voters by launching small projects of limited economic value. Sluggish bureaucratic processes and political instability, leading to frequent changes in government, further delay implementation, leaving projects in limbo. More fundamentally, in our budgeting culture, it is easier to announce projects than to complete them.
To address the situation, the government must enforce strict discipline. Properly planned projects — with sound design, secured land acquisition, cost-benefit analysis and clear timelines — should receive priority funding. Ministries must be held accountable for meeting spending targets, and action should be taken against project offices that fail to utilise allocated funds without justification. National pride projects should take precedence over scattered small-scale initiatives. The Ministry of Finance must ensure timely fund release and closely monitor monthly progress. More importantly, political leaders must resist the temptation to use the budget for short-term electoral gains. The reason 27 per cent of programmes fail to commence within six months is not a lack of funds, but a lack of discipline and planning. Nepal cannot afford another year of sluggish development; the budget must move with purpose.
