Submit your Article

The United States has completed a review of foreign aid for the Millennium Challenge Corporation (MCC) portfolio as part of alignment with the Trump administration’s ‘America First’ foreign policy. The new strategy, MCC explained in a press statement, will make the US ‘safer, stronger and more prosperous’. Further details are to follow after the MCC Board decision-making process and other consultations with the US Congress and partner countries.

The $500m MCC Compact is being implemented in collaboration with the government. The government has agreed to add another $197m, making the project’s total cost stand at $747m. The compact will develop Nepal’s transmission network for electricity and highways, promoting national prosperity and regional energy integration.

Earlier, Millennium Challenge Account Nepal (MCA-Nepal) appreciated the US government’s decision to allow continuation of the project under a special exception with the ongoing suspension of larger foreign aid programs.

On Jan 20, US President Donald Trump issued an executive order directing a review of all US foreign aid in accordance with the ‘America First’ policy. This led to a halt in the disbursement of aid from organizations like USAID and MCC for 90 days. Although MCC was exempted at first, its funding was eventually included in the suspension.

However, in March, MCC granted permission for Nepal to continue with essential procurement and office operations. Since then, project implementation has resumed. The MCC Board has already approved an additional $50m in Jan 2025 to address cost overruns in the transmission line component, although both the Nepal cabinet and US Congress are yet to confirm the release of these funds.

Contracts for three substations of Tanahun (Damauli), Nuwakot (Ratmate) and Nawalparasi, as well as for an 18-kilometer transmission line between the New Butwal substation and the Indian border, have been issued. Physical work has already begun in most places.

MCA-Nepal has also tendered for the remaining 297 km of transmission lines and bid evaluations are in the final phase. An earlier tender for 315 km had to be cancelled after bids received were over 60 percent higher than estimated costs.

Implementation of the five-year compact began on 30 Aug 2023. Any unspent money at the close date will be returned to the US government. To date, during fiscal years 2023 and 2024, $471.3m in obligations have been incurred under the MCC Nepal Compact, states ForeignAssistance.gov.

Signed in Sept 2017, the MCC-Nepal Compact took years of politicking, parliamentary ratification finally happening on 27 Feb 2022. At last, after a six-year break since the signing of the agreement, the project was launched officially in Aug 2023.

Though Nepal has already increased its share from the originally agreed $130m to $197m, the additional $50m MCC aid remains uncertain. Whether or not the Trump administration will approve the additional funds and whether or not Nepal’s cabinet will endorse it remains unknown.

Millennium Challenge Corporation (MCC) is a US government agency established by the Congress in 2004 as an independent entity to reduce global poverty through granting time-limited programs of economic growth, poverty reduction and institution building. While the agency’s top priority is development in partner countries, its mission is also designed to promote American interests abroad.

Nepal was eligible for MCC assistance in 2014 and obtained the $500m grant following persistent dialogue. The compact is one of the biggest bundles of US assistance to Nepal ever and is being implemented under MCA-Nepal, an office established under Development Board Act, 2013.

The CPN-UML has stated that the issue of former President Bidya Devi Bhandari’s party membership renewal has become ‘automatically inactive’. Speaking at a press conference held at the party’s central office in Chyasal on Wednesday, UML General Secretary Shankar Pokharel clarified that as per the party statute, only the Central Committee can decide on membership renewal. Since the committee has established that there is no requirement for Bhandari to return to active politics, the question of membership does not arise.

“We decided that the ex-president should not return to politics. So, the issue of renewing her membership in her party is no longer relevant. We have shelved it,” Pokharel said. He said that Bhandari had submitted her membership renewal application and fee a year ago, but the matter was not disclosed but was kept secret until the internal debate took place. It became known only after Bhandari herself disclosed it.

“Since her honored previous position, it was viewed as a delicate issue. We did not wish to expose it without due deliberation. But as she publicly disclosed it, the party was forced to react,” Pokharel explained.

The UML has also contended that it is against the constitution for an ex-head of state to resume partisan politics. The party contends that Constitution of Nepal 2015 does not envision the active political stances taken by a ceremonial head of state, a symbol of national unity and neutrality, after retirement. “The Nepali democratic system envisions the President as a constitutional, not an executive head. So, returning to party politics after serving as President cheapens the office,” wrote a UML release.

The statement pointed out that Bhandari is a highly respected figure in Nepali politics and had behaved with dignity—both as a party member and as the President. She was even honored during UML’s Diamond Jubilee as a ‘Pride of the Republic’. But, citing constitutional values and precedence, the party concluded that allowing an ex-president to engage in partisan politics would cast doubt on their previous decisions and impartiality.

At the same time, General Secretary Pokharel claimed that the UML has not excluded anyone from running for leadership in the coming party convention. In reply to the rumors that recent amendments of the statutes—removing two-term and age-70 limitations—were made so as to provide KP Sharma Oli with uncontested leadership, Pokharel claimed the amendments were debated from an institutional point of view. “Anyone who fulfills the party’s requirements can run.” “The offer is open and democratic,” he said, adding that most members of the Central Committee consider Oli to be the most suitable to take the party through the next general elections.

The party’s ninth Central Committee meeting had concluded late Tuesday night after passing eight resolutions. The debate over Bhandari’s political role took up much of the meeting, and a minimal dissent was voiced. However, Oli concluded the meeting by announcing that Bhandari’s party membership issue had not been endorsed. The UML leaders warned that allowing a former president to return to party politics could set a negative precedent, potentially politicizing the constitutional office of the President.

The Ministry of Culture, Tourism and Civil Aviation has obtained the final investigation report on the fatal accident of a Saurya Airlines CRJ-200 aircraft (tail number 9N–AME) that crashed shortly after departure from Tribhuvan International Airport on 24 July 2024 claiming the lives of 18 people.

The report was formally presented to Minister Badri Prasad Pandey by Ratish Chandra Lal Suman, chairman of the government-appointed inquiry commission. Minister Pandey, at the handing-over ceremony, assured that the ministry would take action based on the report’s findings and confirmed that the inquiry was conducted independently and without the influence of any external party.

What, when and where?

On July 24 morning, a Saurya Airlines Bombardier CRJ-200, on a non-commercial ferry flight to Pokhara for routine maintenance, crashed seconds after lifting off from runway 02 of Tribhuvan International Airport. There were 19 people on board, including cockpit and engineering staff.

Shortly after takeoff at 11:11 am, the plane made a sudden rightward bank and plunged near runway 20, bursting into flames upon impact. Emergency responders—including airport firefighters, police, and the military—were deployed swiftly. The accident claimed 18 lives and temporarily shut down airport operations, delaying multiple domestic and international flights. Only the captain survived.

The incident prompted an immediate government response, and a five-member investigation commission was formed in an emergency Cabinet meeting. The team, which was headed by Ratish Chandra Lal Suman, former director general of the Civil Aviation Authority of Nepal (CAAN), also included Captain Dipu Jwarchan, engineering professors Kuldip Bhattarai and Sanjay Adhikari, and CAAN air traffic controller Mukesh Dangol.

Their finished report outlines the crash’s causes and provides recommendations for preventing such an incident from recurring.

What went wrong?

Preliminary reports suggest a number of operational failures. One of the most significant was incorrect weight distribution; bags were not properly stowed and may have shifted on takeoff. The crew also used takeoff speeds that did not match guide figures from the plane manual, resulting in unstable flight dynamics.

The report highlights that the pitch rate during takeoff was as high as 8.6° per second—nearly three times higher than that specified by the manufacturer—making the aircraft uncontrollable seconds after rotation. Furthermore, the ferry flight had been cleared without due supervision from CAAN, bypassing critical safety checks.

The aircraft had not been operated for over a month and was heading to Pokhara for base maintenance. Despite holding a valid airworthiness certificate and having undergone minimum return-to-service inspections, the report states that more thorough maintenance tasks had been deferred.

The captain, with over 6,000 hours of flight time—much of it on the CRJ-200—was accompanied by a far less experienced co-pilot. The technically competent crew, it is reported, failed to take into account critical parameters like proper trim settings, load balancing, and correct speed selection.

The aircraft was full of 19 individuals and approximately 600 kg of baggage, bringing its total takeoff weight to over 18 tons. The investigators found that proper load-securing measures, such as cargo nets and straps outlined in the airline’s Ground Handling Manual, were not followed.

It is estimated that the unsecured load created an aft center of gravity, which, in combination with an improper stabilizer setting, might have led to an uncontrollable nose-up pitch during climb-out—aerodynamically stalling.

The investigation also revealed procedural deficiencies at CAAN. The ferry flight was approved despite missing or incomplete documentation, contrary to the requirements of CAAN’s own 2015 Flight Permission Manual. The regulator was chastised by investigators for allowing a potentially non-compliant aircraft to fly without invoking appropriate safety checks.

The commission called for urgent overhaul of CAAN procedures for approving non-scheduled and ferry flights.

Both Flight Data Recorder (FDR) and Cockpit Voice Recorder (CVR) were recovered and analyzed in Singapore with international help. Data revealed that both engines were functioning normally throughout the flight.

However, pitch rate data and audio transcripts revealed a series of stall warnings (stick shaker activations) seconds into the takeoff. The plane rolled uncontrollably as the pilot fought to regain control—first to the right, then left, and once again right—before the crash. It all took place in under 20 seconds, which reflected the rapidity with which events unfolded.

The investigation commission also issued a series of interim safety recommendations directed to airline operators and the CAAN. Among the significant directives was the revision and updating of takeoff speed charts and Reduced Takeoff Weight (RTOW) data with immediate effect so that they align with the aircraft manufacturer’s official manuals.

The commission demanded rigorous enforcement of baggage and cargo handling rules, with proper weight distribution and load securing using nets or straps to prevent load shifts during flight. It also called for the complete overhaul of CAAN’s flight authorization process, particularly ferry and chartered flights, to close oversight loopholes and improve compliance with established safety procedures.

In 2013 the European Union, citing safety issues, banned airlines licensed in Nepal from flying the European airspace.

Saurya Airlines will do “everything possible” to implement and adhere to the recommendations, operation manager Bivechan Khanal told Reuters. The crash highlighted the poor air safety record of landlocked Nepal, which depends greatly on air connectivity.

Prime Minister KP Sharma Oli has once again stated his claim that Lord Ram was born in Nepal and made another new claim—that Lord Shiva could have been of the Chamling community from eastern Nepal.

Speaking at a national seminar on ‘Tourism in Nepal: Status, Challenges and Possibilities’ by CPN-UML’s Tourism Department at Kathmandu on Monday, Oli called for greater trust in selling Nepal as the birthplace of such revered spiritual figures as Ram and Shiva. “We keep talking a lot about how to develop tourism but don’t have the courage to say that Ram was born in Nepal,” Oli stated. “Why would we let people say he was born somewhere else by just making up things? We shouldn’t be afraid to speak the truth just because others would get angry.”

Repeating what he had said before, Oli said that Lord Ram was born in Thori, Madi area of Chitwan, which is currently a part of Nepal. “I am not saying it was Nepal then, but today the land is in Nepal. Whether it was a Tharu settlement or something else at that time, we have to accept the present situation,” he said.

He criticized the reluctance of Nepalis to assert such things, reasoning that fear of controversy should not stifle facts. “If speaking the truth makes you angry, then what are we living for?” he questioned. “We can’t even assert Ram was born here. That shows how afraid we have become.”

Oli also suggested Lord Shiva might have been a Chamling boy, referring to the sacred caves of Halesi in eastern Nepal that are connected to Shiva and are located in a region normally inhabited by Chamling people.

“Sometimes I wonder if perhaps Shiva might have been Chamling. The caves we call Halesi, where it’s believed that Shiva meditated, are located around the Chamling community. Perhaps he was Chamling,” Oli said. “But I’m not claiming anything—just making an educated guess. Through the years, different histories may have converged, but geography doesn’t alter.”

He also said that other great religious personalities like Vedvyas, Kapil Muni and Gautam Buddha were born in Nepal. Quoting the Valmiki Ramayan, he said sage Vishwamitra taught Ram and Lakshman west of the Koshi river, which means the incident took place within what is today’s Nepal. “I did not write the Ramayan—it explicitly states that Vishwamitra went across the Koshi and taught Ram and Lakshman. It is also obvious that Vishwamitra was from Chatara,” he stated.

Oli’s remarks are part of a broader initiative to try to put Nepal on the map as a nation of extreme historical and spiritual significance, though his statements continue to receive praise and criticism in equal measure. While some appreciate his attempts to unveil Nepal’s ancient heritage, others fault the historic validity and political motive behind doing so.

While these remarks may appeal to Oli’s nationalist base, they are likely to provoke unease in India, where Lord Ram and Shiva are deeply revered and closely tied to cultural identity. His comments could complicate his efforts to improve bilateral ties and may jeopardize his official visit to India which was supposed to happen soon, diplomatic sources suggest.

Oli’s statements echo similar claims made during his earlier term as prime minister, when he said Ram was not born in Ayodhya, India, but in Chitwan. That assertion had drawn sharp responses from Indian media and political circles.

The Nepali Army has completed five decades of service to the conservation of nature and environment across Nepal, marking a milestone in the country’s fight to protect its fragile biodiversity and natural heritage. Over the years, the Army has played a critical role in safeguarding national parks, wildlife, forests, and Himalayan ecosystems.

Nepal’s formal conservation journey took a major step in 1961 when the Army began rhino patrols in response to the declining population of the endangered one-horned rhinoceros, which had dropped from 800 to around 100. In 1973, Chitwan was declared the country’s first national park, and two years later, the government officially tasked the Nepali Army with park security.

Today, around 8,000 army personnel are deployed across 14 protected areas—including 12 national parks, one wildlife reserve, and one hunting reserve—through eight battalions, seven independent units, and one dedicated conservation training school.

Operating under National Parks and Wildlife Conservation Act (1973) and the ‘Permanent Operating Procedure’ endorsed by the Council of Ministers in 2010, the Army has worked closely with government bodies, local communities, and international partners to implement large-scale operations like ‘Operation Conservation’, now in its 11th edition, says the Nepali Army Spokesperson Brigadier General Raja Ram Basnet who also is the director of Directorate of National Park and Wildlife Reserve.

The Army’s protection duties include patrolling inside national parks and wildlife reserves, preventing encroachment, combating illegal poaching, and controlling deforestation. In support of nature conservation research, the Army provides human resources for wildlife censuses, offers essential information related to conservation efforts, and assists in the rehabilitation of wild species.

As part of its social services, the Army aims to raise awareness about environmental protection. These efforts include large-scale afforestation programs, repairing and renovating schools and shrines, supporting health centers in buffer zones and protected areas, providing medical care and water supply, and contributing to the construction of bridges and short stretches of road.

According to the Army website, in disaster management, the Army’s strategic locations and organizational structure enable it to respond swiftly to natural calamities and assist victims effectively. Furthermore, the Army contributes to human resource development by preparing and providing trained personnel for conservation education and training programs within buffer zones, national parks, and wildlife reserves.

Forests occupy 25.4 percent of the land area of Nepal, but deforestation is rampant. FAO estimates that Nepal lost about 2,640 sq km of forest cover between 2000 and 2005. In this bleak scenario, the protection of forests and their biodiversity is a great challenge to Nepal. The Army’s 12 battalions and independent companies protect forest areas measuring some 9,767 sq km.

This effort has yielded remarkable results. The number of Bengal tigers in Nepal increased from 121 in 2009 to 355 in 2022, making Nepal the first country to more than double its tiger population ahead of the 2022 global commitment timeline. Similarly, the one-horned rhino population, once near extinction, rose to 752 as of the 2021 census.

In 2019, the Army launched the ‘Clean Himalaya Campaign’ in coordination with various stakeholders to address rising pollution in the mountain regions. So far, the campaign has collected over 119 tons of waste, recovered 12 dead bodies, and managed four human skeletons from Sagarmatha and other peaks.

Despite budgetary constraints halting this year’s campaign, the Army carried out the ‘Exercise Shikhar Yatra’ to collect 500 kilograms of waste from Pangboche and Dingboche under the Sagarmatha National Park and raised awareness among locals and trekkers, says Basnet.

Deployed across the country’s diverse geography—from the +42°C heat of the Tarai to the -20°C cold of the Himalayas—the Army conducts daily patrols on foot, bicycles, vehicles, boats, and even elephants to prevent illegal activities like poaching and encroachment. “The Army also runs awareness campaigns in local communities and schools to ensure people are part of the solution.

Technological advancements such as drones, CCTV surveillance, Smart Eye, Vehicle Tracking, and the Real-Time Patrol Monitoring System have been incorporated to modernize conservation efforts,” says Basnet. However, the Army emphasizes the need for further technological upgrades to meet evolving challenges.

The Army notes that despite strong efforts, numerous challenges persist. These include climate change impacts, illegal wildlife trade, human-wildlife conflict, habitat encroachment, and limited access to cutting-edge technology. Nepal also faces external pressures, such as international demand for wildlife products and its role as a transit country in global trafficking networks.

Nonetheless, Nepal’s integrated conservation model—combining military deployment, community involvement, and governmental cooperation—has earned international acclaim. Nepal celebrated several years (2011, 2013, 2015, 2016, 2018, and 2019) as ‘Zero Poaching Years’. Multiple army units have received the Abraham Conservation Award, and Bardiya National Park won the prestigious Tx2 Award for tiger conservation.

According to Basnet, the Army’s 50-year conservation journey is not just about protection, but also about ensuring sustainable development and responsible tourism. The preservation of Nepal’s unique biodiversity contributes significantly to global climate goals, especially in light of the Paris Agreement’s Article 6 and 9 provisions for climate finance.

Moreover, the Himalayas, which are crucial to the water supply for nearly 1.5bn people, are under increasing threat due to global warming and tourism-related pollution. “The Army’s clean-up campaigns and high-altitude patrols aim to safeguard these ecosystems for future generations,” says the Army.

Lieutenant Colonel Gajendra Rawal, operation officer at the Directorate of National Park and Wildlife Reserve, says that the Army is continuously enhancing its efforts through School of Nature Conversation. The school, operated by the Army for about a decade now, trains security personnel in nature conservation practices, particularly for those deployed within the park. The school also functions as a joint conservation institution, involving park officials, conservation partners, and other stakeholders.  

There are 12 different regulations related to national parks and wildlife conservation. The government is currently working to consolidate them into a single umbrella regulation, which is expected to address the existing gaps and community concerns.

The United States government has granted a special exemption to allow the continuation of the Millennium Challenge Corporation (MCC) Compact in Nepal, permitting ongoing development projects to proceed despite a broader freeze on American foreign aid programs.

Millennium Challenge Account-Nepal (MCA-Nepal), the agency responsible for implementing the compact, issued a statement on Wednesday confirming and welcoming the US decision. The $500m American grant aims to upgrade Nepal’s electricity transmission infrastructure and improve key sections of the East-West Highway.

According to MCA-Nepal, the exemption allows for the full implementation of the compact’s critical components, including the construction of 297 kilometers of 400 kV electricity transmission lines and essential road maintenance activities. Contracts have already been awarded for three major 400 kV substations and an 18-kilometer cross-border transmission segment.

While the exact date of the US decision has not been disclosed, the MCC had formally informed Nepal in March that procurement and operational work could not proceed amid an ongoing review of American foreign assistance programs.

The temporary suspension stemmed from a directive issued by former US President Donald Trump, calling for a pause and reassessment of several foreign aid initiatives. The MCC Nepal Compact was among the projects temporarily halted under a 90-day review. Despite the pause, both the US Embassy in Nepal and MCC headquarters had reiterated their continued commitment to the Nepal Compact. Wednesday’s announcement reaffirms that commitment and ensures that key infrastructure projects—seen as crucial for Nepal’s energy security and economic development—will continue without interruption.

Of the total $500m grant, $398m is allocated for transmission line construction, while $52m is designated for road upgrades, particularly along the Dhankhola–Bhaluwang–Lamahi–Shivakhola section of the East-West Highway. MCA-Nepal stated it is working closely with the MCC to finalize procurement processes and accelerate the implementation of all planned components under the compact.

Nepal’s children are facing increasingly severe risks to their health, development, and future as the impacts of climate change intensify across the country. Despite contributing only 0.1 percent to global greenhouse gas emissions, Nepal ranks as the fourth most vulnerable nation to climate change, according to the Global Climate Risk Index. Rising temperatures, erratic rainfall, shrinking snow caps, and extreme weather events are no longer distant warnings—they are now disrupting the lives of millions of children nationwide.

Data from the Department of Hydrology and Meteorology (DHM) show that Nepal’s annual maximum temperature is increasing by 0.056°C per year. This seemingly small rise has serious implications, especially for mountain ecosystems, where even a 1.5°C increase can drastically alter the environment. The visible effects include reduced snowfall, shifting precipitation patterns, and more frequent and intense disasters such as floods, landslides, and droughts.

These climate changes are having direct and devastating consequences for children. According to UNICEF, over 236,000 children in Nepal were displaced by weather-related disasters between 2016 and 2022, with 95 percent of those displacements caused by flooding. In 2024 alone, more than 23,000 students saw their education disrupted by climate-related events. Meanwhile, over 10m children are at risk from vector-borne diseases that are becoming more prevalent as temperatures rise and rainfall becomes erratic. Water scarcity affects another 8m children, further compounding their vulnerability.

The impacts are not limited to physical health. Psychological trauma, educational disruption, and the erosion of essential services are affecting children’s cognitive and emotional development. Climate-related stressors are increasingly linked to mental health issues such as anxiety, especially among youth. A UNICEF-supported survey found that more than half of children and youth living in climate risk-prone areas in Nepal have already experienced at least one form of climate-induced hazard, and four out of five believe they are at future risk. Half of the victims of climate-induced deaths and injuries in six of Nepal’s most climate-vulnerable municipalities were children or youth.

Air pollution, exacerbated by changing weather patterns and urban growth, has become another deadly threat. In 2021, more than 4,000 children under the age of five died in Nepal due to pollution-related causes as per UNICEF Global Health Estimates, 2022. These deaths are especially tragic because they are largely preventable through cleaner energy sources and improved public awareness.

Young children are particularly vulnerable to environmental hazards because of their physiology and behavior. Between birth and age three, 80 percent of brain development occurs. During this time, children’s immune systems are not yet fully developed, making them more susceptible to diseases. They also consume more air, food, and water per unit of body weight than adults, which increases their exposure to environmental toxins. Their natural behaviors—such as crawling and putting objects in their mouths—also place them at higher risk of ingesting pollutants in soil, water, and air.

Beyond immediate health impacts, the longer-term consequences of climate change include undernutrition due to declining agricultural productivity, the spread of disease, loss of livelihood, and eventual migration. These factors together fuel cycles of poverty, inequality, and deprivation that extend far beyond the childhood years, creating intergenerational consequences for Nepal’s most vulnerable communities.

UNICEF warns that nearly 66 percent of young people in Nepal are unable to clearly explain what climate change is, even though about half report feeling extremely worried about their future because of it. This gap between awareness and understanding underscores the urgent need for climate education, child-centered policies, and stronger adaptation measures across all levels of government and society.

As the climate crisis accelerates, Nepal’s children are increasingly paying the price, say the experts. “Their exposure to both immediate and long-term risks requires urgent action—ranging from better health protections and safer learning environments to stronger disaster preparedness and climate literacy.”

Deputy Prime Minister and Finance Minister Bishnu Paudel unveiled a budget of Rs 1.946trn for the fiscal year 2025/26 at the joint meeting of federal parliament on Thursday.

Under the new budget, recurrent expenditures, which includes salaries, administrative costs, and government operations, have been allocated Rs 1.18trn (60.01percent of the total budget). Capital expenditures, which funds infrastructure and development projects, have been set at Rs 407.6bn, while Rs 375.2bn has been earmarked for financial management, which entails debt servicing and fiscal stablization measures. 

Revenue collection will serve as the primary source of the budget, with the government estimate to raise Rs 1.315trn. Similarly, the government plans to mobilize Rs 362bn through domestic borrowing, while another Rs 233bn will be acquired through foreign loans. Rs 53bn will be arranged through grant contributions.

Finance Minister Paudel outlined five core objectives and seven key priorities for the upcoming fiscal policy, which is set to come into effect from July 17. According to him, the five primary objectives of the new budget are: achieving high, sustainable, and broad-based economic growth with the goal of poverty alleviation; promoting entrepreneurship and expanding both public and private investment to create jobs; enhancing economic capacity through use of modern technology; ensuring social justice through social protection and development programs; and promoting quality public services and good governance.

He elaborated that the budget will focus on seven priorities, including the promotion of entrepreneurship, employment, production, and productivity; expansion of investment in quality and result-oriented physical infrastructure; qualitative improvements in the social sector; balanced regional development; strengthening of social security; the provision of citizen-friendly services; and effective measures for corruption control and governance reform.

Minister Paudel announced that the private sector will be established as a key driver of economic prosperity in Nepal. He said the government will gradually implement the recommendations of the High-Level Commission on Economic Reform. He further emphasized that the government will focus on diversifying financial resources to meet the minimum investment requirements following Nepal’s upgradation to a developing country by 2026, and to achieve the Sustainable Development Goals (SDGs) by 2030.

A total of Rs 1.48bn in fiscal equalization grants has been transferred for the upcoming fiscal year. Finance Minister Paudel announced that Rs 60.66bn has been allocated in fiscal equalization grants for provinces and Rs 88.97bn for local governments. Conditional grants include Rs 30.35bn for provinces and Rs 211.46bn for local levels, totaling Rs 241.81bn in grants.

For the implementation of infrastructure projects, Rs 3.28bn has been allocated as complementary grants to the provinces and Rs 10.06bn to the local governments. Additionally, Rs 3.27bn has been allocated as special grants to provinces and Rs 9.78bn to local levels. The government estimates Rs 165bn will be transferred to provinces and local levels through revenue sharing. Altogether, including both revenue sharing and grants, a total of Rs 582.83bn is estimated to be transferred to the province and local governments in the upcoming fiscal year.

Rs 57.48bn has been earmarked for the Ministry of Agriculture and Livestock Development. The government has announced plans to supply 600,000 metric tons of chemical fertilizer, for which Rs 28bn has been allocated. The budget also includes a provision to initiate preparations for establishing a chemical fertilizer factory in the country. The government also announced plans to produce 55m doses of vaccines to control diseases affecting livestock and poultry. 

Among the more forward looking programs is a plan to provide concessional loans to startups, particularly those based on innovation and led by young entrepreneurs. Such loans will be provided at an interest rate of three percent, with Rs 730m allocated for this purpose.

Finance Minister Paudel also announced reforms in land management. For example, the government plans to operate land banks in 100 local levels. Landowners who wish to lease their land can collaborate with local governments, and the land banks will be able to acquire land through agreements with local units. The government will also conduct land use zoning through local governments. The government plans to amend the land-related laws to distribute land ownership certificates to 500,000 families.

The government has also decided to open avenues for Nepali investors to invest abroad. Businesspeople and investors will be allowed to invest up to 25 percent of their total exports overseas. Permission for such foreign investments will be granted by the Nepal Investment Board. The finance minister said the government will enter Rs 700bn project development agreements with the private sector through the Investment Board, with Rs 400bn worth of construction projects to begin within the same fiscal year. Rs 740m has also been allocated to support the Investment Board.

To curb black marketing, monopolies, syndicates, and other unethical market practices, the government plans to expand consumer tribunals in all provinces in the upcoming fiscal year. Finance Minister Paudel also announced the Deposit and Credit Protection Program to protect the money of depositors in cooperatives. The program aims to save up to Rs 500,000 per saver in cooperatives.

In a bid to transform the aviation sector, the government announced plans to separate the Civil Aviation Authority of Nepal, one as service provider and the other as regulator entities. The finance minister said  necessary steps will be taken within the fiscal year to remove Nepali sky from the European Union’s blacklist. 

The government also plans to construct airports in Nijgadh and Surkhet, as well as upgrade the existing ones in Bhadrapur, Dang, and Kathmandu. Finance Minister Paudel also announced plans to operate Gautam Buddha International Airport in a worker-friendly and affordable manner and to develop Pokhara International Airport as a tourist-focused airport.

The government has not increased civil servants’ salaries this time either. However, the dearness allowance has been raised by Rs 3,000, bringing it to a total of Rs 5,000 per month. Despite persistent demands from civil servant associations to raise salaries even marginally, Finance Minister Paudel said the government was unable to do so due to financial constraints.

On the institutional front, the government plans to retain land ownership of public enterprises. Finance Minister Paudel said studies will be conducted into Janakpur Cigarette Factory, Gorakhkali Rubber Industry, and Hetauda Cement Factory, with a view to increasing government investment in these state-owned enterprises.

In the energy sector, the government plans to generate an additional 942 megawatts of electricity from hydropower projects set to be completed within the year. With this addition, the country’s total installed power generation capacity will reach 4,800 megawatts. The government has also set the target of constructing 731 kilometers of national transmission lines to enhance electricity distribution and reliability across the country. 

Likewise, the government plans to move forward with the construction of the Amlekhgunj–Lothar petroleum pipeline. Additionally, work on the cross-border Siliguri–Charali petroleum pipeline and storage facilities is also set to begin in the upcoming fiscal year.

The government has decided to keep existing customs duties and other taxes on electric vehicles (EVs) unchanged. Amid speculation that the government might increase customs duties, importers had rushed to bring in EVs, resulting in congestion at the dry port in Chobhar. Similarly, electric vehicle assembling industries will only be subject to one percent customs duty. The same one percent rate will apply for tunnel boring machine imports by the private sector. The government will exempt customs duty on the import of machinery used for green hydrogen production and charge just one percent customs on batteries for solar energy.

The finance minister also announced a five percent income tax rate on income earned by those working in the information technology (IT) sector from within Nepal—this will be a final withholding tax. He also announced plans to amend laws related to VAT, excise duties, and income tax. In addition, a study will be conducted to introduce a multi-rate VAT system. Tax exemptions will be granted to IT-based industries and hotels.

The VAT on digital payment processing has been scrapped, and advance income tax on the import of various fruits and vegetables has also been eliminated. Meanwhile, the finance minister declared increased taxes on tobacco and alcoholic products.

To address the unemployment problem, the government is set to launch an employment portal to make it easier to find jobs and workers. Finance Minister Paudel also said bilateral labor agreements will also be signed with various countries to create foreign employment opportunities and guarantee workers’ safety, particularly of women. 

For the social security program, the government has allocated Rs 109bn. It also announced plans to integrate scattered welfare programs. It announced that the Social Health Security Program will be integrated into the health insurance scheme. An institutional administrative system will be established to control insurance leakage. Insurance benefits for senior citizens, persons with disabilities, Dalits, the ultra-poor, and minority groups will continue. A budget of Rs 10bn has been allocated for the Health Insurance Program, compared to Rs 7.5bn in the previous year. Currently, the Health Insurance Board still owes over Rs 16bn to service providers. Minister Paudel stated that arrangements have been made for this outstanding amount to be covered through a third party within the current fiscal year.

The government has also increased the age limit for receiving the senior citizen allowance. Previously, all senior citizens who had completed 68 years of age were eligible to receive the allowance. However, the government has now raised this limit by two years, setting it at 70 years. Nonetheless, senior citizens from remote, marginalized, and Dalit communities will continue to receive the allowance at the earlier age of 60.

Finance Minister Paudelr said national identity cards will gradually be made mandatory for everyone enrolled in welfare schemes. Senior citizens will be provided national identity cards through mobile service teams.

To improve the education sector, the government has allocated Rs 211.17bn to the Ministry of Education, Science, and Technology. A special incentive program will be launched to support one school in each district, with a grant of Rs 2.5m per school. The government has announced plans to establish a Teacher Bank in collaboration with universities. It has also announced that the Secondary Education Examination (SEE) will be conducted at the provincial level.

Starting next fiscal year, students will be allowed to work up to 20 hours per week. Students will also be provided internship opportunities in public institutions based on the nature of services. The government has also allocated Rs 10.19bn for the midday meal program for students up to Grade 5. According to Minister Paudel, 2.8m students will benefit from this initiative. Additionally, the government will provide free sanitary pads for female students. A Rs 1.29bn budget has been allocated for this program.

The Ministry of Health and Population has been allocated a budget of Rs 95.81bn. The government plans to establish burn treatment departments in each province. It also aims to restructure the Health Insurance Program. Finance Minister Paudel announced that legal provisions will be effectively implemented and the program’s coverage will be expanded as part of the restructuring process. He also said the benefits package for insured individuals will gradually be increased—from the current Rs 100,000 for a family of five.

A record-high budget has been allocated for the youth and sports sector. The government has allocated Rs 6.08bn for the fiscal year 2025/26. This is Rs 2.58bn more than the previous fiscal year, which had a budget of Rs 3.5bn. Investment in sports infrastructure and the professional development of athletes will be increased, and the private sector will be encouraged to invest in sports infrastructure.

Finance Minister Paudel also announced the construction of an international-level modern stadium capable of hosting all sports events in Damak, Jhapa. High-altitude sports stadiums will also be constructed in the Himalayan regions including Solukhumbu and Mustang. Similarly, Rs 400m has been allocated to upgrade TU International Cricket Ground in Kirtipur. Additionally, a total of Rs 420m has been allocated for upgrading the Mulpani, Fapla, Siddhartha, and Girija Prasad Koirala cricket grounds. 

Conditional grants have been arranged to acquire the assets of the Gautam Buddha Cricket Stadium in Chitwan. Rs 540m has been allocated to host the 10th National Sports Tournament in Birendranagar, Surkhet. Funds have also been earmarked for the National Anti-Doping Agency. Medal-winning athletes in international competitions will be incentivized, and scholarships will be provided for their children.

The incentive allowances currently provided to athletes and coaches will continue. Women’s participation in sports will be increased, and awards will be introduced for outstanding female athletes. 

The government has set an economic growth target of six percent for the upcoming fiscal year.  However, the National Statistics Office (NSO) has projected that economic growth will reach  4.61 percent. Likewise, the government has set an inflation target of 5.5 percent for the new fiscal year—up from 5.3 percent in the current fiscal year. The size of the economy is estimated to reach Rs 6,107bn in the current fiscal year. If the six percent growth target set for the next fiscal year is achieved, the size of the economy will reach Rs 6,473.42bn in 2025/26.

The government has projected the economic growth rate to reach 4.61 percent in the ongoing fiscal year 2024/25, signaling a modest recovery after recent years of slow growth. The finance minister announced that the country’s total economic output is expected to expand to Rs 6.17trn by the end of the fiscal year. The agriculture sector will contribute approximately 25.16 percent to Gross Domestic Product (GDP), underscoring its central role in the economy.

Nepal’s per capita income has reached $1,517, reflecting steady economic improvement and a moderate pace of growth following earlier stagnation, Minister Paudel informed lawmakers. 

The government estimates show only 89.4 percent of the total allocation will be spent in the current fiscal year. The government had planned to implement a budget worth Rs 1.86trn in the current fiscal year. However, it is now estimated that the expenditure will shrink to Rs 1.662trn (89.4 percent of the total allocation). 

According to government estimates, 88.5 percent of the recurrent expenditure and 83 percent of the capital expenditure will be utilized this fiscal year. In the financial management category, 97.6 percent of the allocated budget is expected to be spent. The finance minister also projected that revenue mobilization will increase 17.1 percent this fiscal year.