As the fiscal year 2025/26 enters its final months, Nepal's capital expenditure performance has once again emerged as one of the country's biggest economic concerns. Despite allocating hundreds of billions of rupees for infrastructure and development projects, the government has managed to spend less than one-third of its development budget after ten months of the fiscal year.
The disappointing figures highlight a longstanding problem that has plagued successive governments: an inability to translate budget allocations into actual development work on the ground. Although the current administration came to power with a strong parliamentary mandate and promises of improved governance, the latest data suggest that the pace of development spending remains as sluggish as ever.
The situation has become so concerning that even lawmakers from the ruling coalition's allies have begun openly criticizing the government's performance, calling for major legal and administrative reforms to accelerate project implementation.
Ten Months Gone Yet Less Than One Third of the Budget Spent
According to the latest figures published by the Office of the Financial Comptroller General, the government allocated NPR 407.88 billion for capital expenditure in the current fiscal year.
However, by the end of the tenth month, only NPR 124.61 billion had been spent, representing just 30.72 percent of the total development budget.
The performance is significantly weaker than the previous fiscal year. During the same period in fiscal year 2024/25, capital expenditure had already reached 37.72 percent of the annual allocation.
This decline is particularly notable because the government had reduced the number of ministries from 22 to 18, arguing that a leaner administrative structure would improve efficiency and speed up budget execution. Instead, spending performance has deteriorated further.
The figures reveal a persistent gap between budget announcements and actual implementation, raising concerns about Nepal's ability to deliver infrastructure projects, create jobs, and stimulate economic growth.
Development Ministries Struggle to Utilize Budgets
The situation becomes even more alarming when examining individual ministries.
Nearly a dozen key ministries responsible for development projects have failed to spend even 30 percent of their allocated capital budgets.
The Ministry of Federal Affairs and General Administration ranks among the poorest performers. Out of an allocated capital budget of NPR 756.2 million, the ministry has spent only NPR 23.9 million, equivalent to a mere 3.16 percent.
The Ministry of Culture, Tourism and Civil Aviation, which is responsible for tourism infrastructure and promotion, has utilized only NPR 359.6 million out of its NPR 4.84 billion allocation, representing just 7.42 percent of its budget.
Similarly, the Ministry of Urban Development, one of the country's largest development ministries, has spent only NPR 15.59 billion out of its NPR 72.84 billion allocation, achieving a spending rate of just 21.4 percent.
Other ministries have also reported weak performance:
| Ministry | Capital Budget Spent |
|---|---|
| Youth and Sports | 11.5% |
| Industry Commerce and Supplies | 11.25% |
| Labour Employment and Social Security | 11.96% |
| Communications and Information Technology | 14.51% |
| Forests and Environment | 16.33% |
| Health and Population | 24.7% |
| Agriculture and Livestock Development | 24.24% |
| Education Science and Technology | 26.4% |
| Drinking Water | 27.14% |
Even the Ministry of Physical Infrastructure and Transport, which receives the largest development allocation, has failed to cross the 50 percent spending threshold. Out of NPR 146.28 billion allocated, the ministry has spent only NPR 60.48 billion, equivalent to 41.34 percent.
In contrast, the best-performing ministry in terms of capital expenditure has been the former Ministry of Land Reform, which utilized 55.79 percent of its allocated budget.
Why Capital Expenditure Matters
Capital expenditure is one of the most important drivers of economic growth.
When governments spend on roads, bridges, hydropower projects, airports, irrigation systems, schools, hospitals, and public infrastructure, the benefits extend throughout the economy.
Development spending creates jobs, boosts demand for construction materials, increases business activity, and improves long-term productivity.
When capital budgets remain unspent, economic growth slows, employment opportunities decline, and infrastructure projects face costly delays.
For a developing country like Nepal, where infrastructure gaps remain significant, low capital expenditure directly affects national development goals.
Economists have long argued that Nepal's growth potential is constrained not by budget shortages but by weak implementation capacity.
Lawmaker Calls Nepal's Development Model a Turtle-Speed System
The disappointing expenditure figures have sparked growing frustration among policymakers and the private sector.
Speaking at a recent program organized by the Independent Power Producers' Association of Nepal (IPPAN), lawmaker Shriram Neupane strongly criticized the government's development model and bureaucratic culture.
Neupane argued that Nepal's current pace of development is far too slow to achieve the country's long-term economic ambitions.
Drawing comparisons with neighboring countries, he noted that India and China often utilize more than 30 percent of their annual capital budgets within the first four months of the fiscal year. Nepal, by contrast, continues to rely on the practice of rushing expenditures at the end of the fiscal year, a phenomenon commonly known as the "Asar spending spree."
This pattern frequently leads to poor-quality construction, weak oversight, and inefficient use of public resources.
According to Neupane, Nepal's average capital expenditure rate has remained around 60 percent over the past decade, demonstrating a systemic inability to execute development plans effectively.
Too Few Working Days and Too Many Delays
Neupane also highlighted another structural issue: Nepal's limited number of productive working days.
According to his assessment, India averages around 300 working days annually, while China exceeds 320 days. Nepal, however, effectively operates for only around 240 working days due to numerous public holidays, administrative delays, and bureaucratic procedures.
He argued that major infrastructure projects should operate around the clock through three-shift systems in order to accelerate construction and improve project delivery.
Such an approach, he believes, would significantly reduce delays and improve overall development outcomes.
Proposal for a Ten-Year Sunset Law
One of the most controversial proposals put forward by Neupane is the introduction of a special ten-year "Sunset Act" aimed at removing legal obstacles that frequently delay development projects.
According to him, complicated regulations related to forests, environmental approvals, land acquisition, and compensation have become major barriers to infrastructure development.
The proposed legislation would temporarily simplify or suspend certain procedural requirements for strategically important infrastructure and energy projects.
Supporters argue that such reforms could dramatically accelerate development and investment. Critics, however, warn that weakening environmental protections could create long-term ecological and social risks.
The proposal is expected to generate significant debate in the coming months.
A Persistent National Challenge
Nepal's capital expenditure problem is not new. Successive governments have announced ambitious development plans, yet implementation has consistently lagged behind expectations.
The latest figures suggest that administrative bottlenecks, bureaucratic inefficiencies, regulatory complexity, and weak project management continue to undermine the country's development efforts.
With only two months remaining in the fiscal year, ministries will face intense pressure to increase spending. However, history suggests that a large portion of the budget may once again be spent hastily at the end of the fiscal year rather than through carefully planned project execution.
Unless structural reforms are implemented, Nepal risks continuing a cycle in which ambitious budgets are announced every year but development outcomes fail to match expectations.
The country's challenge is no longer allocating money for development. The challenge is ensuring that those funds are actually transformed into roads, schools, hospitals, energy projects, and infrastructure that can drive long-term economic growth and improve the lives of citizens.
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