Kathmandu – Nepal’s government has set a 7 percent economic growth target for the fiscal year 2026-27, unveiling a budget that leans heavily on welfare spending, infrastructure expansion and a series of administrative reforms aimed at reshaping how the state functions.
Finance Minister Dr. Swarnim Wagle presented the budget in Parliament on Friday also projecting inflation at 6 percent.
The optimism in the numbers stands out especially in a country where sustaining high growth has remained difficult and closely tied to external shocks, remittances and investment bottlenecks.
Breaking from long-standing tradition, the finance minister did not carry the budget in the usual briefcase. Instead, he arrived with a Nepali paper-made folder holding the document, a small symbolic shift in presentation but one that drew attention inside the House.
One of the most significant announcements was a major restructuring of government institutions.
The budget proposes scrapping 31 public bodies and restructuring 18 others part of what the government describes as an efficiency drive. Whether such deep institutional cuts can move from paper to practice, however, will depend on political consensus and bureaucratic resistance.
In a decision that will have immediate fiscal implications, government employees will see a 21 percent salary increase after four years without a revision.
The government defended the hike by pointing to 17.3 percent inflation over the same period though the move will add pressure to recurrent spending at a time when fiscal space remains limited.
To support revenue mobilisation, the budget also introduces lottery schemes linked to remittance inflows, an unusual approach aimed at encouraging formal transfers and improving compliance.
The idea is new for Nepal, but questions remain over how effective such incentives will be in changing behaviour on a large scale.
Health spending has once again taken a central role. At least Rs 15 billion has been allocated to the national health insurance programme which has been under strain due to delayed payments and disruptions in service delivery across hospitals.
The government says the allocation is aimed at stabilising the system, though structural issues in implementation remain unresolved.
In remote Karnali Province, the government has announced air ambulance services to improve emergency care access. Frontline health workers also received targeted relief measures with night-duty allowances for nurses doubled and incentives for female community health volunteers increased by 50 percent.
Social welfare allocations include Rs 2.27 billion for the Ministry of Women, Children, Gender and Sexual Minorities and Social Security along with Rs 1 billion earmarked for nutrition support for Dalit children under five.
While these allocations target vulnerable groups, the impact will depend heavily on how efficiently the programmes are delivered on the ground.
In sports development, the government has promised lifetime free healthcare for athletes who win international medals along with early identification and training of sporting talent from school level.
On infrastructure, the plan is ambitious announcing cricket stadiums in eight major cities within five years, indoor multipurpose stadiums in seven locations including Kathmandu, Pokhara and Biratnagar within three years, and upgrades to at least 10 football stadiums with floodlights.
It is a wide-ranging infrastructure pus but one that will likely test Nepal’s track record on timely completion and long-term maintenance.
The government also announced support programmes for people injured during the Gen-Z movement including entrepreneurship training, medical care and monthly allowances based on condition. Families of those killed in the protests will continue to receive financial assistance and martyrs will be formally honoured.
On the reform side, the budget talks about introducing “sunset laws” to phase out outdated regulations and speed up development work. It also reiterates Nepal’s commitment to exiting the FATF grey list with measures such as green energy bonds and invoice-linked incentives aimed at improving financial transparency.
In heritage and culture, the government has pushed for UNESCO World Heritage recognition for Tilaurakot, Janakpur and Gokarneshwar, alongside a conservation plan for ancient monasteries across Mustang, Manang and other Himalayan districts.
Large infrastructure allocations continue to dominate the capital budget. At least Rs 70 billion has been set aside for completing transmission lines and substations while road connectivity projects such as the Khutiya-Dipayal fast track and key corridor upgrades in Karnali, Kaligandaki and Koshi have been prioritised.
T
aken together, the budget reflects a familiar balancing act with ambitious promises on growth and welfare on one hand and the long-standing challenge of turning large-scale plans into measurable outcomes on the other.
