Budget proposes sovereign wealth fund, Nepal Telecom divestment and energy sector reforms

Nepal's government intends to establish a sovereign wealth fund to manage a portion of the country's foreign exchange reserves, as announced in the budget for fiscal year 2026-27. Finance Minister Swarnim Wagle stated that the fund would be utilized when the foreign exchange reserve position remains comfortable, with current reserves standing at Rs3.49 trillion.

The energy sector is set for reforms, with plans to immediately sign power purchase agreements for projects below 10 megawatts. The government also aims to strengthen Nepal Drugs Limited to enhance healthcare services and will establish an asset management company by mid-January 2027.

In a move to increase public participation in state-owned enterprises, the government will retain a 66 percent stake in Nepal Telecom while distributing the remaining shares to the public. Furthermore, the budget outlines a strategy to develop forests as a basis for import substitution by removing procedural hurdles in the sector.