KATHMANDU — Finance Minister Dr. Swarnim Wagle has presented a historic Rs 2.124 trillion ($2,124.34 billion) national budget for the fiscal year 2026/27 (2083/84) in a joint session of the Federal Parliament.
The new budget is 25.2% larger than the revised estimates of the previous year. It primarily focuses on middle-class tax relief, structural administrative reforms, and boosting domestic production. The government aims to achieve an ambitious 7% economic growth rate while capping inflation at 6%.
The Spending Breakdown
The total budget is divided into three main operational categories:
- Recurrent Expenditure: Rs 1.27 trillion (59.8%) – Earmarked for salaries, allowances, and administrative operations.
- Capital Expenditure: Rs 431.10 billion (20.3%) – Allocated for infrastructure and development projects.
- Financial Management: Rs 422.64 billion (19.9%) – Set aside for public debt repayment and state lending.
How it Will Be Funded
To cover the massive Rs 2.124 trillion layout, the government plans to mobilize funds from a mix of internal revenues and loans:
- Domestic Revenue (Tax & Non-Tax): Rs 1.405 trillion
- Domestic Borrowing: Rs 410 billion
- Foreign Loans: Rs 247.28 billion
- Foreign Grants: Rs 61.74 billion
Major Highlights and Tax Cuts
- Income Tax Relief: The personal income tax exemption limit has been doubled to Rs 1 million per year. Furthermore, the top personal income tax bracket has been reduced by 10 percentage points.
- Simplifying Customs: Nepal’s 11-tier customs duty structure has been compressed into 7 uniform tiers. Customs duties on 273 industrial raw materials have also been lowered to protect local manufacturing.
- Abolishing Duties: Excise duty has been fully removed across 360 separate product categories. Scattered border-point fees have been integrated into a single “Green Levy” to minimize red tape.
- Key Sector Allocations: Infrastructure and transport received the largest sector share at Rs 286.48 billion, followed by the Education sector at Rs 218.30 billion, which includes fresh plans to boost digital learning and IT infrastructure.
