KATHMANDU: The Government of Nepal presented the national budget for the fiscal year 2082/83 (2025-26) during a joint session of the Federal Parliament. The budget speech was delivered by Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel, who detailed the government’s plans, policies, and financial allocations for the upcoming year.
The presentation highlighted the government’s priorities, including economic growth, infrastructure development, social security, and governance reforms. It also addressed the challenges faced by the country and proposed measures to promote investment, job creation, and regional development. This annual budget sets the financial roadmap for Nepal’s progress in the coming year.
This explainer will provide a detailed overview of the key announcements and allocations made in the budget, helping readers understand the government’s fiscal priorities and how they aim to impact various sectors and citizens’ lives.
What is the total size of Nepal’s federal budget for fiscal year 2025-26, and how is it allocated?
The Government of Nepal has unveiled a total budget of Rs. 1.964 trillion for the upcoming fiscal year 2082/83. Finance Minister Bishnu Prasad Paudel presented this estimate to a joint session of the Federal Parliament. The budget is divided into three major categories:
This budget is 5.6% higher than the original allocation for the current year and 18.2% higher than the revised estimate, reflecting the government’s push to increase investment and economic activity.
How does the government plan to finance the budget, and what is the projected deficit?
To finance the Rs. 1.964 trillion budget, the government has projected revenues from the following sources:
This leaves a fiscal deficit of Rs. 595.66 billion, which will be financed through:
In addition, Rs. 417.83 billion has been allocated for fiscal transfers to provincial and local governments, emphasizing Nepal’s federal structure and the importance of local development.
What are the main objectives and priorities outlined in budget?
In the fiscal year 2082/83 (2025-26) budget, Finance Minister Bishnu Prasad Paudel presented five core objectives and seven key priorities to guide Nepal’s economic and social development:
Five main objectives:
Seven key priorities:
How does the government plan to position the private sector in Nepal’s economic growth?
Finance Minister Bishnu Prasad Paudel announced that the private sector will be established as a key driver of Nepal’s economic prosperity. Presenting the budget, Minister Paudel highlighted that the government intends to gradually implement the recommendations of the High-Level Commission on Economic Reform 2081 to strengthen the private sector’s role in the economy.
The government plans to diversify financial resources to meet the minimum investment requirements necessary following Nepal’s anticipated upgrade to a developing country by 2026.
This strategy aligns with broader national goals, including achieving the Sustainable Development Goals (SDGs) by 2030.
Additionally, the budget places strong emphasis on youth-targeted job creation programs, aiming to tackle rising unemployment and promote inclusive economic participation. Overall, the government’s approach reflects a shift toward enabling the private sector as a pillar of sustainable economic growth and development in Nepal.
What major reform has the budget introduced regarding foreign investment by Nepali businesses and individuals?
The budget introduces a landmark reform allowing Nepali businesses and individuals to make partial investments abroad—a historic shift in investment policy since the private sector was first permitted to invest domestically in 2048/49 (1991/92). For the first time, Nepali entrepreneurs can establish sales branches or processing factories in foreign countries, particularly by exporting semi-processed goods.
Under the new legal framework, businesses are allowed to invest up to 25% of their annual export earnings in such overseas ventures. However, there is a condition that at least 50% of the profits generated abroad must be repatriated back to Nepal to benefit the domestic economy.
The Investment Board Nepal (IBN) has been designated as the authority responsible for approving and regulating these foreign investments, ensuring oversight and alignment with national interests.
In addition to this, the budget provides Nepali individuals engaged in technology, specialized knowledge, or service sectors the right to receive “sweat equity” shares—non-cash ownership stakes—in foreign companies in exchange for their intellectual contributions. This innovative provision aims to facilitate Nepali participation in global markets, promote entrepreneurship, and open new avenues for foreign income generation.
Overall, these reforms encourage Nepali businesses and citizens to expand their global footprint while maintaining strong financial and regulatory ties to Nepal.
What are the government’s priorities and key provisions for industrial infrastructure development?
The Government of Nepal has prioritized boosting production and productivity to increase the industrial sector’s contribution to the economy through enhanced industrial infrastructure in the upcoming fiscal year 2082/83. The budget emphasizes policy stability, investment protection, and maintaining good industrial relations as key pillars for industrial growth.
Under the new budget, industries newly established in Special Economic Zones (SEZs) and industrial areas will receive a rent exemption for the first three years of operation. The monthly rent rate in SEZs will be reduced from NPR 20 per square meter to NPR 5. Additionally, industries in industrial areas exporting more than 30% of their production will be eligible for the same facilities as SEZ industries.
To support startup entrepreneurs, NPR 730 million has been allocated for concessional loan programs with an interest rate of 3%, aimed at skill development, business expansion, marketing, and value chain integration. This allocation is slightly lower than last year’s NPR 1 billion budget for the program.
Companies constructing industrial zones will be granted facilities similar to hydropower producers, and industries established within such zones will receive SEZ-level benefits.
Furthermore, monthly rent for industrial zones will be discounted by 50%. A total of NPR 155 million has been earmarked for industrial infrastructure development.
In terms of foreign investment, Nepal aims to become a prime destination by promoting investment opportunities and signing bilateral investment promotion and double taxation avoidance agreements with prospective countries. The government will simplify procedures for bringing in foreign investment and repatriating profits, adopting an “anchor investment” policy to attract foreign capital to priority sectors.
What is the ministry-wise budget allocations?
Finance Minister Bishnu Prasad Paudel, while presenting the federal budget for the fiscal year 2082/83 (2025/26), outlined the ministry-wise allocation of funds, reflecting the government’s strategic policy priorities across a range of sectors. The Ministry of Education, Science and Technology received the highest allocation at Rs 211.17 billion, emphasizing the government’s commitment to human capital development. This was followed closely by the Ministry of Home Affairs, which was allocated Rs 208 billion, underlining the importance placed on internal security and administrative governance.
The Ministry of Physical Infrastructure and Transport received Rs 152 billion, highlighting continued investment in roadways, bridges, and national connectivity. Similarly, the Ministry of Urban Development was allocated Rs 118.34 billion, signaling a major push toward urban planning and municipal services. Health remained a major concern, with the Ministry of Health and Population receiving Rs 95.81 billion to support hospitals, medical services, and pandemic preparedness.
In the energy and water sectors, the Ministry of Energy, Water Resources and Irrigation was allocated Rs 86.10 billion, showing a sustained focus on hydropower development and irrigation infrastructure.
The Ministry of Agriculture and Livestock Development received Rs 57.48 billion, indicating support for food security and agrarian livelihoods.
The Ministry of Defense was allocated Rs 62.10 billion, while the Ministry of Finance, for miscellaneous economic affairs, was assigned Rs 49.90 billion.
Other notable allocations include Rs 33.89 billion for the Ministry of Drinking Water, Rs 18.61 billion for the Ministry of Forests and Environment, Rs 13.28 billion for the Ministry of Culture, Tourism and Civil Aviation, and Rs 11.88 billion for the Ministry of Federal Affairs and General Administration. Smaller allocations were made to ministries such as Women, Children and Senior Citizens (Rs 2.08 billion), Law, Justice and Parliamentary Affairs (Rs 0.52 billion), and Labor, Employment and Social Security (Rs 4.28 billion).
The Office of the Prime Minister and Council of Ministers received Rs 6.44 billion, while the Ministry of Communication and Information Technology and the Ministry of Foreign Affairs were allocated Rs 7.72 billion and Rs 7.84 billion, respectively. The Ministry of Industry, Commerce and Supplies was granted Rs 10.14 billion, and the Ministry of Youth and Sports received Rs 6.07 billion. The Ministry of Land Management, Cooperatives and Poverty Alleviation was allotted Rs 7.49 billion.
Overall, this budget distribution reflects a strong emphasis on education, governance, infrastructure, health, and urban development—signaling the government’s focus on economic growth, social welfare, and institutional strengthening for the year ahead.
Why did the government decide to retain existing tax rates on electric vehicles and what are the implications of this decision?
The government of Nepal has opted to retain the current customs and tax rates on electric vehicles (EVs) for the fiscal year 2025/26, a move aimed at encouraging the adoption of environmentally friendly transportation.
Finance Minister Bishnu Prasad Paudel made the announcement ending recent speculation that EV taxes might be increased.
This policy continuity is seen as a strategic step toward Nepal’s commitment to reducing carbon emissions and supporting green mobility initiatives.
In the lead-up to the budget announcement, concerns about a possible tax hike on EVs had sparked a surge in vehicle imports, leading to logistical congestion at the Chobhar dry port. Importers rushed to bring in vehicles before any unfavorable changes could take effect. The government’s confirmation that tax rates would remain stable helped to ease market anxieties and reassured consumers and industry stakeholders alike.
The decision has broader implications for Nepal’s sustainable development goals. By maintaining lower tax rates, the government is reinforcing its policy of promoting electric mobility over fossil-fuel-based vehicles.
What major reforms have been introduced in the health insurance program and essential services in this year’s budget?
The budget introduces significant reforms to Nepal’s national health insurance program, with a budget allocation of NPR 10 billion. Key changes include:
In addition, free medicine distribution remains a major focus. The government has allocated NPR 2.06 billion to ensure a reliable supply of essential drugs in all health facilities, with transparency ensured through an online tracking system. The reforms aim to improve equity, accountability, and efficiency in health service delivery.
What are Nepal’s electricity generation and transmission targets, and what key focus areas does the energy, water resources, and irrigation budget cover?
For the fiscal year 2082/83 (2025/26), the Government of Nepal has set ambitious targets to significantly enhance its electricity generation and transmission infrastructure. According to the newly announced budget, the country aims to add 942 megawatts (MW) of hydropower capacity from projects expected to be completed within the year, raising the total installed electricity generation capacity to approximately 4,800 MW. To support this growth, the government plans to construct a 732-kilometer double circuit national transmission line to improve power distribution, reduce losses, and ensure more reliable electricity access nationwide.
The Ministry of Energy, Water Resources, and Irrigation has been allocated NPR 8.61 billion to pursue a broad agenda prioritizing energy self-reliance, expansion of irrigation infrastructure, increased hydropower production for export, and promotion of alternative energy sources such as solar, bioenergy, and wind.
In irrigation, the budget targets providing facilities to irrigate 14,000 hectares of farmland, building 63 kilometers of embankments, and protecting 270 hectares from river erosion.
Large reservoir projects including Dudhkoshi (670 MW), Lower Seti, Budhigandaki, Upper Arun, Tamor, and Kimathanka Arun are slated for finalized investment frameworks and accelerated construction, while smaller hydropower initiatives like Tamakoshi-5, Chainpur Seti, and Jagadulla will also move forward. On the international front, Nepal is intensifying diplomatic efforts to boost electricity exports to neighboring countries, advancing cross-border transmission projects such as Butwal-Gorakhpur, Inaruwa-Purniya, and Chamelia-Jaulgile.
Additionally, the budget dedicates NPR 233 million to promote alternative energy sources, NPR 850 million to expand irrigation infrastructure, and NPR 559 million to water-related disaster management. This comprehensive approach aims to harness Nepal’s vast natural resources sustainably, improve domestic energy security, support agricultural productivity, and position Nepal as a reliable electricity exporter in the region.
What are the key tax exemptions and incentives introduced?
The Government of Nepal has announced tax exemptions across more than a dozen categories in the Economic Bill 2082, presented by Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel at the joint session of the Federal Parliament. The bill focuses on promoting investment by prioritizing tax relief and concessions, while maintaining most tax rates except on items considered health risks.
The bill grants special industry status with income tax and electricity duty exemptions to industries based on information technology, as well as hotels and resorts. Startup businesses with annual turnover up to NPR 10 crore will be exempt from income tax for five years.
The government has abolished the value-added tax (VAT) on electric transactions and has not imposed taxes or duties on electric vehicles.
For public and private vehicles older than 20 years or those that cannot be operated, if owners pay income tax for the last two years, the government offers an exemption on the remaining income tax liabilities.
Import duties are waived on machinery and equipment imported for green hydrogen production industries. Additionally, green hydrogen producers will receive income tax exemptions for five years.
Taxpayers who fail to submit VAT or excise tax returns but subsequently file returns and pay taxes will receive relief from interest, additional fees, late penalties, and fines. Moreover, income from IT service exports enjoys a 75% tax exemption, and individuals residing in Nepal earning income from exporting IT services abroad will be subject to only a 5% income tax rate.
What is the government’s plan regarding consumer courts?
Government of Nepal plans to expand consumer courts to all seven provinces. Finance Minister Bishnu Prasad Paudel announced this during his presentation of the annual budget in a joint session of the Federal Parliament. The move builds on the pilot implementation of consumer courts in the three districts of the Kathmandu Valley during the current fiscal year 2081/82.
The government has allocated budgetary resources to establish consumer courts across the provinces with the aim of strengthening consumer rights and ensuring a fair and competitive market.
This is in line with the government’s broader strategy to control black-marketing, monopolies, cartels, and other unethical market practices, as stated in the current budget.
Although the Consumer Protection Act was enacted in 2075 B.S. (2018), it wasn’t until Chaitra 2, 2081 B.S. (March 15, 2025) that consumer courts began functioning.
The Act provides for the formation of these courts to uphold consumer rights as guaranteed under Article 44 of the Constitution. The upcoming expansion marks a significant step toward fully implementing the law and improving consumer access to justice throughout Nepal.
What changes did the Government of Nepal make regarding civil servant salaries and allowances?
Government of Nepal decided not to increase the basic salaries of civil servants due to financial constraints, despite repeated demands from civil servant associations. However, the government raised the dearness allowance by Rs. 3,000, bringing it to a total of Rs. 5,000 per month. This adjustment aims to help civil servants cope with rising living costs without increasing the overall salary burden on the national budget.
Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel, while presenting the budget in Parliament, emphasized the government’s limited financial resources as the main reason for withholding salary hikes. Alongside this, the budget includes measures aimed at fiscal discipline, such as restricting foreign visits that impose financial strain on institutions and adopting austerity policies as mandated by the constitution.
Furthermore, the government plans to retain ownership of land held by public enterprises as part of institutional reforms. Studies are slated for key state-owned enterprises like Janakpur Cigarette Factory, Gorakhkali Rubber Industry, and Hetauda Cement Factory to explore opportunities for increased government investment and improved performance. These measures collectively reflect the government’s cautious approach to managing public finances while attempting to address institutional efficiency.
What incentives has the government introduced for airlines operating at Pokhara and Bhairahawa airports?
Government of Nepal has announced special facilities and incentives to promote airline operations at Pokhara and Bhairahawa airports. Finance Minister Bishnu Prasad Poudel revealed that the budget includes tax exemptions and other benefits specifically targeted at Kathmandu-based airlines to encourage them to expand their flight services to these two international airports.
This move aims to boost regional connectivity, tourism, and economic growth by making air travel more accessible and efficient outside the capital.
Additionally, the budget has allocated Rs 500 million for the management and development of domestic airports nationwide. The funding is intended to upgrade infrastructure and enhance service quality across the country’s aviation sector, thereby supporting the overall expansion and modernization of Nepal’s air transport network.
How much financial support will the Government of Nepal provide to provincial and local governments and how will it be distributed?
Government of Nepal plans to transfer a total of Rs 582.83 billion to provincial and local governments through various financial mechanisms. Deputy Prime Minister and Finance Minister Bishnu Prasad Poudel announced this allocation while presenting the national budget at the Federal Parliament.
The fund distribution includes:
These conditional, special, and matching grants will be distributed based on performance metrics to ensure efficient utilization of funds. The comprehensive financial transfers reflect the government’s commitment to empowering subnational governments for balanced development and improved public services across Nepal.
What measures has the government taken regarding inappropriate projects?
Budget highlighting a decisive move to eliminate inappropriate and non-viable projects from the government’s development portfolio. This measure aims to ensure more efficient use of public resources by cutting funding and support for projects that do not meet required feasibility, sustainability, or priority criteria.
The budget underscores a strategic shift toward strengthening sectors that have the potential for high impact on employment generation and economic growth. A special emphasis has been placed on youth employment programs, recognizing the critical need to provide sustainable job opportunities for Nepal’s large young population. In addition, the budget focuses on fostering entrepreneurship and promoting sustainable development models that align with Nepal’s long-term economic and environmental goals.
By weeding out unsuitable projects, the government intends to streamline development spending, improve project outcomes, and channel resources into sectors that contribute effectively to national progress. This approach reflects the government’s commitment to prudent fiscal management, accountability, and enhancing the overall quality of development initiatives. It is expected to facilitate faster and more inclusive economic growth while ensuring that public investments deliver measurable benefits to citizens across the country.
How much budget has the government allocated for the Kathmandu-Terai and Madhesh Expressway projects and what are the planned construction targets?
The Government of Nepal has allocated NPR 2.449 billion for the Kathmandu-Terai and Madhesh Expressway Road projects in the fiscal year 2082/83 (2025-26).
Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel announced this allocation during the budget presentation in the Federal Parliament.
The planned construction targets for the upcoming year include completing 37 kilometers of sub-base road, constructing 4 kilometers of tunnel, and building 60 bridges along the expressway route.
This funding aims to accelerate the development of this vital infrastructure, which is expected to improve connectivity between Kathmandu and the Terai region, boosting economic activities and regional integration.
What new policy has the government introduced regarding the misuse of cooperative funds?
The government has introduced a strict policy to tackle the misuse of funds in cooperatives. According to the budget for fiscal year 2082/83 presented by Finance Minister Bishnu Prasad Paudel, the government will auction off the properties of those who embezzle or misappropriate cooperative funds and use the proceeds to compensate the victims.
Additionally, the government has decided to freeze the assets and passports of directors and officials involved in problematic cooperatives. This policy aims to hold accountable those responsible for financial irregularities in cooperatives and ensure justice for affected members.
How much budget has the government allocated for social security allowances in the upcoming fiscal year, and what does this signify?
In the upcoming fiscal year 2082/83 (2025-26), the Government of Nepal has allocated a substantial amount of Rs 109 billion (one hundred nine billion rupees) specifically for social security allowances. The budgetary provision covers all types of social security benefits, including allowances for senior citizens, single women, people with disabilities, marginalized communities, and other vulnerable groups.
This considerable investment in social security reflects the government’s increasing focus on social protection as a crucial pillar of inclusive development and poverty alleviation.
By allocating such a large sum, the government aims to strengthen the safety net for disadvantaged populations and reduce economic inequality.
The enhanced funding is expected to improve the livelihoods of millions of Nepali citizens who depend on these allowances for basic needs such as food, healthcare, and housing.
Furthermore, this budget commitment aligns with Nepal’s constitutional mandate to ensure social justice and uphold the rights of vulnerable groups through effective social security programs. It also corresponds with broader national and international development goals, such as the Sustainable Development Goals (SDGs), which emphasize the importance of social protection systems in building resilient societies.
What is the government’s new policy regarding budget reallocation for national pride projects in the upcoming fiscal year?
Starting from the upcoming fiscal year 2082/83 (2025-26), the Government of Nepal has declared that it will not allow the reallocation or transfer of budgetary funds allocated to high-priority national pride projects. This policy was announced by Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel while presenting the annual budget in the joint session of the Federal Parliament.
According to Minister Paudel, once the budget is allocated for these major projects, the funds must be utilized as planned without any diversion to other areas. This step is intended to ensure timely completion and maintain the quality of important infrastructure and development projects that are considered a matter of national pride. However, he did mention that in exceptional circumstances, some reallocation may be permitted, indicating flexibility for unforeseen situations.
In addition, the government plans to closely monitor projects costing over Rs 250 million by establishing a national dashboard.
This dashboard will track the progress, quality, and timely completion of these projects to ensure transparency and accountability in their implementation.
This new policy aims to strengthen project management, avoid budget misuse, and assure the public that funds dedicated to landmark developments are used efficiently. By preventing budget transfers, the government seeks to uphold the integrity of these national projects and contribute to Nepal’s sustainable economic growth and development.
How has the budget allocation for the Youth and Sports sector changed and what are the government’s priorities within this sector?
The government allocated NPR 6.08 billion for the Youth and Sports sector. This allocation shows a significant increase from last year’s NPR 3.5 billion budget, marking a rise of NPR 2.58 billion, or approximately 74 percent.
This is the highest budget for Youth and Sports in the past five years, with the previous peak being NPR 3.99 billion in fiscal year 2076/77 (2019-20). The sharp increase highlights the government’s renewed focus on youth empowerment and sports development.
Within the sports sector, cricket has been given special priority, with major investments planned for physical infrastructure development. However, other key national sports like football and volleyball have not been given the same level of budgetary attention, indicating a strategic emphasis on cricket, likely due to its growing popularity and international prospects.
The increased budget aims to improve sports infrastructure, support athlete training programs, and engage youth nationwide. While this funding boost is expected to elevate Nepal’s sports profile, the selective focus on cricket may lead to calls for more balanced support across different sports disciplines in future budgets.
What are the government’s plans for Tribhuvan International Airport as outlined in the recent budget?
Finance Minister Bishnu Paudel has announced plans to develop Tribhuvan International Airport into a “boutique” international airport that showcases Nepal’s rich cultural heritage and traditional architecture.
Originally built in 2045 BS with financial assistance from the Asian Development Bank, the airport’s design was inspired by the traditional “Ghara” style houses of Kathmandu and was created by German and Japanese engineers.
This initiative was first introduced in the government’s 2076 BS policy program and has been under active development since late 2075 BS by the Ministry of Culture, Tourism, and Civil Aviation. For the fiscal year 2082/83 (2025-26), the government has earmarked NPR 415 million to expand the airport’s capacity to better manage the rising passenger traffic.
Alongside infrastructure development, the budget also prioritizes improving air travel safety standards to help Nepal get removed from the international aviation safety blacklist.
