Upcoming fiscal year budget: Project cuts loom amid budget strain

KATHMANDU, MAY 20: With the upcoming fiscal year 2025/26 just around the corner, the government is under mounting pressure to screen projects and mobilise the necessary resources.

Given the current shortfall in public revenue and the gradual rise in public borrowing, the government has been unable to raise resources in line with the budget ceiling of approximately Rs. 1.906 trillion set by the National Resource Estimation Committee for the new fiscal.

Vice Chair of the National Planning Commission, Dr. Shivaraj Adhikari, described resource management and project prioritization for the forthcoming budget as a major challenge. To address these issues, the Commission convened a meeting yesterday with former vice-chairs and members to discuss strategies for effective resource allocation and project prioritization.

"Revenue, which declined during the COVID-19 pandemic, has yet to recover its previous momentum. Foreign grants are also shrinking. These problems have become chronic, entangled, and systemic," Dr. Adhikari remarked. "There is a lack of coordination among different levels and agencies of government. In such a context, resource management becomes all the more challenging."

Due to this resource constraint, the government is expected to introduce significant cuts to projects in the upcoming budget. Dr. Adhikari indicated that projects listed in the government’s Red Book, which are either unimplemented or not delivering results, will be subject to major reductions.

He further shared that the National Project Bank contained more than 18,100 projects as of the current fiscal year 2081/82 BS. However, in light of resource limitations, the number has now been trimmed to around 7,000 projects.

“Only those projects that have a defined timeline and cost, are adequately prepared, and are capable of enhancing or transforming public assets upon completion are currently retained in the project bank,” he explained.

Additionally, it has been decided that projects estimated to cost over Rs. 30 million will be included in the project bank. Projects that remain unimplemented for five years will be automatically deactivated from the list.

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