Kathmandu-The Prime Minister Balen Shah-led government has allocated a total budget of Rs 2.124 trillion for the upcoming fiscal year 2026-27.

Presenting the budget during a joint session of the Federal Parliament, Finance Minister Dr. Swarnim Wagle stated that out of the total allocation, Rs 1.270 trillion, or 59.8 percent, has been earmarked for recurrent expenditure.

A total of Rs 431.10 billion, equivalent to 20.3 percent of the budget, has been allocated for capital expenditure, while Rs 422.64 billion, or 19.9 percent, has been set aside for financial management. The estimated expenditure is around 25 percent higher than the revised estimate of the current fiscal year.

To manage the projected expenditure for the coming fiscal year, the government expects to generate Rs 1.405 trillion from revenue and receive Rs 61.74 billion in foreign grants.

Of the remaining financing gap of Rs 657.29 billion, Rs 247.28 billion will be raised through foreign loans.

The remaining Rs 410 billion will be managed through domestic borrowing. Since the government is expected to repay Rs 245.89 billion in principal on domestic debt in the coming fiscal year, the net domestic borrowing is projected at only Rs 164.11 billion.

Under the provisions related to fiscal transfers, and based on recommendations from the National Natural Resources and Fiscal Commission, the government will provide Rs 61.50 billion in fiscal equalization grants to provincial governments and Rs 90.20 billion to local governments.

To support infrastructure project implementation at provincial and local levels, the government has allocated Rs 4.60 billion and Rs 8.93 billion respectively as matching grants.

Similarly, special grants amounting to Rs 3.82 billion for provinces and Rs 9.40 billion for local governments have been allocated.

For the implementation of federal government projects, conditional grants worth Rs 49.72 billion will be distributed to provincial governments and Rs 206.08 billion to local governments.

Additionally, provincial and local governments are expected to receive a total of Rs 175 billion through revenue sharing.

The government has projected that more than Rs 600 billion in resources will be mobilized at provincial and local levels through revenue sharing, royalties, and fiscal transfers in the upcoming fiscal year.-