KATHMANDU, July 13: The government has once again failed to spend much of the budget allocated for development projects, with capital expenditure remaining below 45 percent in the fiscal year 2025/26, despite expectations that the new government would accelerate infrastructure spending.
Government payment releases ended on July 9. By July 11, only Rs 181.59 billion, or 44.52 percent, of the Rs 407.88 billion allocated for capital expenditure had been spent.
The performance marks a sharp decline from last fiscal year, when capital spending reached 59.59 percent. This year's execution rate is 15.07 percentage points lower.
According to the Financial Comptroller General Office, the government spent Rs 1.565 trillion, or 79.69 percent of the total Rs 1.964 trillion budget, by July 12. Overall spending was slightly lower than the 80.99 percent recorded during the same period last year.
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Most government spending went toward recurrent expenses rather than development projects. Of the Rs 1.181 trillion allocated for recurrent expenditure, Rs 1.043 trillion, or 88.31 percent, had been spent. The spending covered salaries, social security payments, administrative costs, and other mandatory obligations.
Financial management spending also remained high. The government spent Rs 340.72 billion, or 90.8 percent, of the Rs 375.24 billion allocated under that heading.
The gap between recurrent and capital spending has again raised concerns over the government's ability to implement development projects. Capital expenditure directly supports infrastructure construction, job creation, and economic growth. Failing to spend even half of the development budget by the end of the fiscal year points to persistent weaknesses in budget execution.
Nepal has long struggled with low capital spending due to delays in project selection, slow procurement, poor coordination among government agencies, and shortages of construction materials and manpower.
Revenue collection also fell short of target. The government aimed to collect Rs 1.48 trillion in revenue during the fiscal year but had collected Rs 1.184 trillion, or 79.99 percent of the target, by July 11.
The government's long criticized practice of concentrating spending in the final weeks of the fiscal year has also continued. Economists have repeatedly argued that last minute spending reduces the quality and effectiveness of development projects and weakens the efficient use of public funds.
Although successive governments have pledged to improve budget implementation, this year's figures suggest little progress. While the government has largely met its recurrent spending obligations, it continues to struggle with mobilizing investment needed for long term economic growth and infrastructure development.
Meanwhile, government expenditure exceeded total income by more than Rs 344 billion during the fiscal year, pushing the national treasury into deficit.
Data from the Financial Comptroller General Office show that by July 11, the government had received Rs 1.221 trillion from tax revenue, non tax revenue, grants, and other sources. Total expenditure during the same period reached Rs 1.565 trillion, leaving a deficit of Rs 344.06 billion.
The gap between government income and spending is covered through domestic and foreign borrowing, cash reserves, and other financing sources. Budget deficits are common in developing countries, where governments often spend more than they collect to finance infrastructure and social programs.
However, economists warn that borrowing remains sustainable only if the funds are invested in productive sectors that generate future economic returns. Excessive reliance on debt to finance recurrent expenditure could increase fiscal pressure in the years ahead, making debt management, spending quality, and fiscal discipline key challenges for Nepal's economy.
