June 21, Kathmandu – Shortly after taking office, Finance Minister Dr. Swarnim Wagle released a position paper titled “Current Economic Situation of Nepal,” issued by the Ministry of Finance. The paper analyzed Nepal’s economic condition under the ministry’s stewardship, with Dr. Wagle stating, “The state’s failure to ensure the security of private property, enforce contracts, and maintain regulatory stability deterred investment and trapped the economy in an unproductive cycle.” He added, “Distrust towards the private sector and excessive distributional populism hindered prioritization of production, investment, and productivity growth. Consequently, neither the market became dynamic nor did the state’s structures become accountable.”
As the government completes its first 100 days, Finance Minister Dr. Wagle has a long list of paperwork, meetings, and decisions to his name, yet no tangible improvement in the economic situation is evident. In fact, the Ministry of Finance regards key economic indicators up to the end of this fiscal year (mid-July) as inherited legacies and has repeatedly stated, “Let us look at the upcoming fiscal year,” a phrase the minister has reiterated numerous times in Parliament. He had announced legal reforms, relying on the report of a high-level Economic Reform Advisory Commission, a move generally seen as positive.
Former Vice-Chairman of the National Planning Commission, Prof. Dr. Govind Raj Pokharel, points out that despite Minister Wagle’s reform efforts, no results have materialized in the field. “Although he declared private sector-friendly legal reforms,” he said, “there have been no results, possibly due to a lack of improvement in overall administrative practices.”
Examining the economic indicators mentioned by the finance minister, the banking system still holds around NPR 1.25 trillion in liquidity, yet the private sector remains unenthusiastic about investment. Investors in the stock market remain hesitant, waiting cautiously. With only two weeks left in the fiscal year, development expenditure has reached just 36 percent, and revenue collection has achieved only 76 percent of the target. Commitments for foreign direct investment have not increased substantially, and the government’s public debt continues to rise, although the finance minister describes this as “past baggage.”
However, most infrastructure projects financed by past public debt are now in their final stages. The Nagdhunga tunnel highway is expected to be operational from the start of the next fiscal year. The construction of the Butwal-Narayangadh road is nearing completion. The Siddhababa tunnel and Pokhara-Muglin highway projects are also in their last phase. The external sector remains robust, though this stability reflects trends from recent years. Factors like increased remittance, moderate import growth, relative export growth, and improved tourist arrivals have resulted in a comparatively satisfactory external sector. Among Dr. Wagle’s most significant accomplishments in his 100-day tenure is the presentation of the upcoming fiscal year’s budget; however, he missed the opportunity to make the budget a cornerstone of his tenure.
The budget, introduced alongside a promise to expand the middle class, faced criticism from analysts for imposing taxes on fundamental rights such as health and education, disproportionately burdening the lower classes. While Dr. Wagle claimed to have introduced a transformative budget, funds were primarily allocated to existing projects without launching new programs or initiatives. The economic bill tabled in Parliament elicited widespread criticism after the Ministry of Finance made unilateral amendments. The minister has been accused of misleading the public by announcing certain budgetary provisions during speeches that were not incorporated into the economic and appropriations bills.
The persistent practice of allocating budgets to numerous small-scale projects in the NPR 100,000 to 200,000 range and withholding large portions of funds continued under Finance Minister Wagle’s leadership. Additionally, the delay in appointing a chairman to the Securities Board attracted criticism; the board’s chairman was only selected a few days ago. The Internal Revenue Department and Customs Department remain under acting leadership, and the board of directors for the National Commercial Bank has yet to be formed. “Despite the government’s enthusiastic public support, anticipated major investors have not channeled their investments through the Investment Board, private sector investment proposals have not emerged, and public trust remains lacking,” Pokharel observed. Even after creating a special team for budget preparation, the frequent transfer of joint-secretaries signals instability within the civil service. Efforts to remove Nepal from the Financial Action Task Force’s grey list through anti-money laundering measures have not been successful. The finance minister attributed this status to “35 years of previous misgovernance,” describing it as a normalization.
The Prime Minister’s Office’s dominance became evident in budget formulation. This time, budget suggestions were collected through a portal operated by the Prime Minister’s Office. Regarding revenue determination, the finance minister publicly acknowledged acting under Prime Minister Balendra Shah’s guidance. Some pledges made to the private sector faced setbacks, as the government imposed pressures on entrepreneurs and intimidated construction companies. Ministers even publicly issued threats to individuals’ lives, and some prominent construction professionals were arrested without cause. Dr. Wagle has publicly stated that the private sector is essential in creating a NPR 100 trillion economy, with the government adopting a policy of “listening before acting.” However, lower-level agencies within the Ministry of Finance appear to act contrary to this policy. Meanwhile, government commitments to the private sector and cooperation efforts have not aligned. Even with tightened restrictions on goods worth over NPR 100 at border crossings, the finance minister has been accused of lacking understanding of common citizens’ hardships. The threshold has now increased to NPR 500.
What reforms have been initiated? The finance minister has made some attempts at reform. The Electronic Pension Authentication System has been launched to resolve issues affecting over 350,000 pensioners, reducing difficulties in pension renewals and bank selection. Physical presence is no longer required for pension payments. Since April 28, the government has begun providing salaries to federal civil servants every 15 days, a pilot project initiated by the Ministry of Finance. During budget implementation, income tax exemption limits were raised to NPR 10 million to facilitate employees, though this adjustment was not without controversy. Even the highest-ranking officers, including the chief secretary, were kept outside the tax limit. Those earning up to NPR 50,000 monthly were not previously liable to pay income tax, so the raise or lack thereof in the exemption limit had no direct effect on them. Under the Economic Reform Plan, fuel allowances for government officials were cut; secretaries who previously received 125 liters will now receive only 70 liters. However, ministers and constitutional office holders saw no reductions in their benefits. Customs duty and infrastructure development fees on fuel imports were reduced by 50 percent, but this relief has yet to be felt by the general public. Additionally, an online registration system for tourist transport vehicles crossing Nepal’s land borders has been implemented by the Customs Department.
According to former National Planning Commission Vice-Chairman Pokharel, three months into the ministry’s work should have shown signs of long-term progress, but such signs remain absent. Despite the government’s enthusiastic appeal and public support, major investors are expected to engage through the Investment Board, the private sector should bring forward investment proposals, and public confidence in economic governance should strengthen—yet none of these objectives have been achieved.