Fiscal Discipline Crucial for Nepal's Economic Growth

Strategic Insights -

Nepal's upcoming fiscal year 2025-26 budget has been hailed as relatively balanced and meeting fiscal discipline criteria by former Finance Minister Dr. Prakash Sharan Mahat. In a recent discussion in the House of Representatives, he emphasized the need for strict fiscal discipline to drive economic growth through government investment. The budget has implemented a provision to avoid proposing projects costing less than Rs 30 million at the federal level, a measure that Mahat believes will help reduce wasteful spending and promote accountability.

Key Takeaways:

  • Former Finance Minister Dr. Prakash Sharan Mahat has stressed the importance of fiscal discipline in Nepal's budget for the upcoming fiscal year 2025-26.
  • The budget is relatively balanced and meets fiscal discipline criteria, but still includes projects below Rs 30 million, which will be phased out gradually.
  • The budget has the potential to drive economic growth through government investment, particularly in tourism and infrastructure development.
  • Mahat emphasized the need to focus on projects that deliver tangible results and to avoid proposals for small-scale projects in the province.
  • The government needs to put in more effort to meet revenue mobilization targets, with a proposed budget of Rs 1964 billion, which is not fully expected to be met.
  • The lack of fiscal discipline and orderliness in the past budget has been addressed in the new budget, but more serious attention is needed to avoid future problems.
  • MP Mahat underscored the importance of maintaining budget discipline in the province, stating that small projects should be funded through budget allocation and implemented through mandatory contracts.

Statistics:

  • The proposed budget for the upcoming fiscal year 2025-26 is Rs 1964 billion.
  • The budget has implemented a provision to avoid proposing projects costing less than Rs 30 million at the federal level.
  • Foreign aid and foreign loans have been suggested, but the government needs more effort to meet revenue mobilization targets.
  • Small projects below Rs 30 million are still included in the budget, but will be phased out gradually.

Sources:

  • "Nepali Congress lawmaker Prakash Sharan Mahat stresses on fiscal discipline in the new budget", My Republica, [no date cited]
  • "House of Representatives discusses annual estimates of revenue and expenditures", My Republica, [no date cited]