Nepal's development spending short of even half of annual allocation

Nepal's government has once again failed to meet its development spending targets, with capital expenditure reaching only 46.79 percent of the annual allocation for the current fiscal year. This marks the weakest performance in six years, highlighting a persistent issue that hampers infrastructure expansion and diminishes the impact of public investment.

Despite repeated promises to improve budget execution, successive governments have struggled to translate allocated funds into completed projects. Common reasons cited include delays in project preparation, procurement difficulties, insufficient implementation capacity, and frequent political instability. This year's low spending rate, at Rs190 billion out of an allocated Rs407.89 billion, is particularly concerning.

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The government failed to spend even half of the capital budget allocated for the current fiscal year, recording the country’s weakest development spending performance in six years.

Government officials pointed to several disruptions, including the "Gen Z" protests in September, the federal parliamentary elections in March, the subsequent formation of a new government, and supply chain issues stemming from the conflict in West Asia. However, economists argue that such disruptions do not fully explain the chronic underperformance.

Economist Dilli Raj Khanal criticized the current government, which emerged from the "Gen Z" movement, for failing to prioritize development works. He stated that despite promises of good governance, the government has neglected this crucial area, leading to another year of poor capital spending. This continued failure to effectively utilize the capital budget not only slows down essential infrastructure development but also stifles economic growth by reducing demand in construction and related sectors.

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The government came to power on the promise of good governance, but it has neglected governance.