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Kathmandu, Feb 11: The government has decided to cut 14.04 per cent from the Rs 1.964 trillion budget allocated for the current fiscal year 2025 to 2026. Releasing its mid-year review report on Tuesday, February 10, 2026, the Ministry of Finance revised total spending down to Rs 1.688 trillion.

A similar revision was made last fiscal year. Of the Rs 1.860 trillion budgeted, estimated spending was later reduced to Rs 1.513 trillion through a mid-year review.

Presenting the report, Joint Secretary Suman Dahal said only 85.96 per cent of the initial allocation is expected to be spent this year. The revised estimate includes Rs 1.125 trillion for recurrent expenditure, Rs 243.30 billion for capital expenditure, and Rs 319.04 billion for financial management.

To finance this spending, the government plans to raise Rs 1.515 trillion from domestic revenue and borrowing. It expects Rs 30.99 billion in foreign grants and Rs 141.95 billion in foreign loans.

The government has adopted a policy of cutting funds from stalled and unprepared projects and reallocating them to priority areas. While allocations for unproductive or incomplete projects have been suspended, projects that have begun and justified their relevance will continue to receive funding. The reallocated funds will go toward nationally significant projects, reconstruction of damaged infrastructure, and mandatory liabilities.

Admitting that capital spending lagged behind targets in the first six months, the government has reprioritised expenditure for the remaining period. High priority has been given to rebuilding public infrastructure damaged during the protests of September 8 and 9, 2025, and to providing treatment, relief and financial assistance to the injured and families of those killed. Resources will also be arranged for the upcoming House of Representatives election and for security agencies.

Finance Minister Rameshwar Khanal said Japan has agreed to provide Rs 392.5 million in grants for election-related monitoring. India will also provide vehicles and cash assistance.

The government has frozen Rs 42 billion allocated to small, fragmented and non-performing projects and recently reallocated Rs 1.72 billion to urgent and capital-forming sectors. It also plans to review procurement laws, link the project bank with the budget information system, and enforce the return of unspent funds from provinces and local levels to the federal treasury within the current fiscal year.

People’s News Monitoring Service