Kathmandu-The government has projected that it will miss the targets set in the current fiscal year’s budget. Like previous years, it expects both expenditure and revenue targets to fall short.

In its mid-term review of the fiscal year 2025-26 budget, the Ministry of Finance said spending and revenue will not meet the targets.

The government has revised total spending to 85 per cent of the budget, or Rs 1.688 trillion. Recurrent spending is expected to reach Rs 1.125 trillion, or 95 per cent of the allocation. Capital spending is estimated at Rs 243 billion.

The government had frozen Rs 119 billion allocated to unprepared projects. It later released Rs 40 billion. Despite cancelling projects worth Rs 80 billion, the spending estimate still looks ambitious.

Finance Minister Rameshwar Khanal said the figure is only a projection, adding that  the government can still spend the full Rs 1.9 trillion if capacity improves.
He said the government focused on managing a safe political transition during the first three months of the fiscal year.

This slowed progress.

Total revenue collection is projected to reach Rs 1.535 trillion.

The ministry said upcoming elections in the next six months may increase economic activity. However, it still expects revenue and spending to miss targets.

The ministry’s review said the Gen-Z movement at the start of the fiscal year affected infrastructure, public sentiment, and the political climate. This slowed spending over the past six months.

Finance Secretary Ghanshyam Upadhyaya said the government introduced a business recovery plan after the protests. He said the economy stabilized faster than expected despite fears of collapse.

He credited strong management and ministerial leadership for the quick recovery in budget implementation and market activity.

Upadhyaya said reforms in customs and internal revenue administration have improved the investment climate.

Suman Dahal, chief of the ministry’s budget division, said spending has reached 35 per cent of total allocation. He said this is 3 per cent higher than last year and shows public finance has recovered faster than expected.