Revenue Mobilization at Rs 157 Billion vs Expenditure Rs 163 Billion – Nepal Records Budget Deficit

Nepal has recorded a budget deficit of Rs 23.96 billion within the first two months of the fiscal year 2025/26, according to the latest Nepal Rastra Bank (NRB) Government Budgetary Operations Report. The deficit emerged as total government expenditure reached Rs 163.47 billion, surpassing total resource mobilization of Rs 139.51 billionduring the review period.

The report highlights that total revenue mobilization, including federal, provincial, and local government transfers, stood at Rs 157.53 billion, marking a slight decline from Rs 166.38 billion recorded during the same period in FY 2024/25. Of the total, federal government revenue accounted for Rs 135.88 billion, while foreign grants amounted to Rs 2.46 billion, reflecting a marginal drop in grant inflows.

On the financing side, internal borrowing reached Rs 70.09 billion, primarily driven by the sale of development bonds worth Rs 70 billion, while foreign loans contributed Rs 10.05 billion to the financing portfolio. Together, these sources provided Rs 80.15 billion in additional funding for budgetary operations.

The provincial governments reported a combined fiscal surplus of Rs 21.03 billion, supported by Rs 25.15 billion in resources against Rs 4.12 billion in expenditure. Likewise, local governments’ balances improved by Rs 36.49 billion, reflecting continued under-utilization of budget allocations at the subnational level.

By mid-September 2025, the cash balance of the general government (including federal, provincial, and local deposits) stood at Rs 255.61 billion, indicating ample fiscal liquidity. This includes Rs 116.55 billion in local government deposits, suggesting that expenditure execution remains slower than revenue collection and borrowing.

Economists note that although revenue mobilization remains strong, the persistent spending gap—particularly in capital projects—continues to constrain fiscal effectiveness. They emphasize that timely budget disbursement, better coordination among government tiers, and improved project execution capacity are essential to narrowing the deficit and boosting economic growth momentum.