Nepal’s rising budgets fail to translate into revenue, spending and growth gains
Summary
Nepal faces economic challenges due to a widening gap between ambitious budgets and weak revenue collection, hampering effective spending and growth. Despite increasing budget sizes, capital expenditure and investment remain low, risking a debt trap and stagnant growth.
Key Points
- Nepal's rising budgets are not translating into increased revenue or effective spending, weakening economic growth.
- Capital expenditure averaged only 19% of total federal spending, with actual spending at 64.1% of allocation, reflecting poor investment execution.
- Government recurrent expenditure dominates, but the quality of spending remains low and inefficient, affecting public services.
- Economists warn that without fiscal reforms and improved investment, Nepal risks falling into a debt trap and missing its growth targets.
