Nepal Targets Economic Growth and Financial Reform in NRS 2.124 Trillion Budget

Nepal unveils a NRS 2.124 trillion budget for fiscal year 2026-27, aiming to exit the FATF grey list and achieve 7% economic growth. The budget focuses on financial discipline, regulatory compliance, tax reforms, and sectoral investments to boost governance and recovery.

Nepal's government has announced a bold NRS 2.124 trillion budget for the fiscal year 2026-27, marking a significant step following last year's Gen-Z protests. The new budget, presented by Finance Minister Swarnim Wagle in the Federal Parliament, aims to address key issues such as economic recovery, governance strengthening, and exiting the Financial Action Task Force's (FATF) grey list. The government's ambitious target is to achieve a 7% economic growth rate.

Emphasizing financial discipline and regulatory compliance, Wagle highlighted measures to mitigate exchange risks associated with foreign loans and investments. The introduction of hedging services beginning the next financial year is expected to facilitate the improvement of the country's sovereign credit ratings, helping Nepal eliminate the grey-list designation due to money laundering concerns.

Overall, the budget outlines comprehensive reforms spanning taxation, capital markets, agriculture, infrastructure, and health. Notably, it proposes key tax reforms, such as increasing the personal income tax exemption threshold and streamlining capital gains tax on listed securities. The government also plans sectoral investments, including substantial allocations for agriculture, healthcare, and social programs. In the international arena, cultural heritage initiatives aim at securing UNESCO World Heritage recognition for specific sites.