NPC recommends FinMin slash troubled projects for FY 2025/26

KATHMANDU: National Planning Commission (NPC) has recommended that the Ministry of Finance (MoF) significantly reduce troubled projects due to anticipated resource constraints for the fiscal year 2025/26.

It has pointed to increased pressure on sectors with mandatory responsibilities in the upcoming fiscal year, advising the MoF to discontinue failed and problematic projects. This recommendation is outlined in its report on discussions regarding policies and programmes for the formulation of budget for next fiscal year.

“There is little possibility of significant reform in revenue mobilisation in the upcoming fiscal year. Foreign grants have gradually decreased over recent years, and the procurement of foreign loans has not aligned with commitments,” the report states. It advises that measures be taken to manage the limited resources for budgetary purposes in light of these challenges.

The NPC has already suggested that the government prepare the budget within a ceiling of Rs 1,965 billion. The share of current and mandatory responsibilities in the budget has been rising, with increasing public debt, repayment of principal and interest, employee remuneration, and social security allowances contributing to expenditure growth. These escalating costs continue to strain budgetary procedures, necessitating reduced allocations for development projects.

Furthermore, reconstruction efforts following the Jajarkot earthquake and the September 2024 water-induced disasters, coupled with the need to mobilise additional resources for social security and health insurance, have further complicated budget priorities.

The NPC stated that prioritising obligations created by relevant ministries and agencies has limited the scope for mobilising resources in other sectors.

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