With the burden of loan repayments and growing current liabilities, the Ministry of Finance has repeatedly stated that even the regular budget is barely sufficient to meet existing obligations, making it difficult to initiate new projects.
During discussions on the Alternative Development Finance Bill, the Finance Minister told a parliamentary committee that it is no longer possible to increase investment in physical infrastructure as needed from regular revenue sources.
He explained that since development projects cannot be expanded solely through revenue and public borrowing, the government is seeking new sources of investment through this proposed arrangement. However, members of parliament have been raising sharp questions on the matter.
Institutions such as HIDCL and NIFRA have been established, but they have yet to justify their effectiveness. As a result, the government’s latest initiative is being questioned.
The Finance Minister has consistently warned that the inability to carry out the required level of development through regular resources has become a serious issue. For the past eight years, the government has been unable to advance large-scale infrastructure projects. Since the implementation of fiscal federalism, the Government of Nepal has struggled to move forward with any major and notable development schemes.
Apart from the transmission line being built under the American MCC grant, the government has not been able to push ahead with any significant new projects. Despite public discussions, no major development projects have been launched, except for the continuation of previously initiated ones.
With the exception of smaller-scale schemes, no high-cost signature projects capable of boosting the national economy have been advanced. Projects that have been under construction for a decade or more are yet to be completed, and no new ones have commenced.
The Ministry of Finance has explained that post-earthquake reconstruction costs, along with the debts incurred during the COVID-19 period, have already been spent. Coupled with the resulting current liabilities and loan repayment obligations, the regular budget is barely sufficient, making it challenging to start new projects.
Plans for railways, tunnels, and expressways have been announced, but many of these projects have stalled after initial studies, while others have remained only on paper. According to ministry officials, revenue has not increased in line with expenditure obligations, and with the burden of debt continuing to rise, new projects have not been feasible.
In the past, the government temporarily halted new projects to ensure that resources for ongoing construction were not disrupted, enabling timely completion. However, the lack of progress on any notable signature projects over the past eight years has heightened the risk of slowing development in a country that is still in the process of building its economy.