Nepal budget has no measures to mop up surging deposits, analysts say
Summary
Nepal faces a surplus of idle banking funds despite robust remittance inflows, while its 2026-27 budget introduces investment reforms but lacks measures to effectively deploy excess liquidity and revitalize economic growth.
Key Points
- Nepal's banking system holds over Rs1.4 trillion in idle funds amid record remittance inflows and surplus foreign exchange reserves.
- The 2026-27 budget introduces investment-friendly reforms but falls short in addressing core structural issues to deploy excess liquidity.
- Private sector investment has significantly declined, with a low domestic savings rate causing a negative saving-investment gap historically.
- Government plans include legal amendments to boost investment, ease foreign investment, and incentives such as tax rebates to stimulate economic activity.
