#NepalEconomy #PublicFinance #
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By Sandeep Chaudhary

Government Expenditure Rs. 44B in First Month: Capital vs Recurrent Spending Trends

Government Expenditure Rs. 44B in First Month: Capital vs Recurrent Spending Trends

The Government of Nepal spent Rs. 44.31 billion in the first month of fiscal year 2025/26, showing a moderate start to expenditure execution. According to Nepal Rastra Bank’s budgetary operation data, total spending increased compared to Rs. 37.87 billion in the same month of the previous year — a year-on-year rise of nearly 17%.

Of the total expenditure, a large share is still recurrent spending, mainly covering administrative costs, salaries, pensions, and regular operations. Capital expenditure, which reflects infrastructure and development investment, continues to lag behind — remaining only a small fraction of total outlays during the first month. Financial expenditure, including domestic debt servicing and repayment, also accounted for a notable portion, reflecting the government’s rising debt obligations.

Economists warn that such an imbalance between recurrent and capital spending remains a structural weakness in Nepal’s fiscal system. While higher recurrent spending keeps the government functioning, the low capital expenditure slows development project implementation and limits long-term growth potential. However, the early rise in total spending could also indicate that ministries have started their budget execution earlier than in previous years — a positive administrative sign.

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