NPC fixes budget ceiling at Rs 1.89 trillion, sets revenue target of Rs 1.378 trillion for next FY

KATHMANDU, March 5: The National Planning Commission (NPC) has fixed a budget ceiling of Rs 1.89 trillion for the upcoming Fiscal Year 2026/27.

The ceiling is Rs 76 billion lower than the estimated budget of Rs 1.964 trillion announced for the current Fiscal Year 2025/26.

NPC Vice-chairperson Prakash Kumar Shrestha said the commission had initially considered endorsing a budget of Rs 2.128 trillion for the next fiscal year. However, citing actual resource availability and the government’s spending capacity, the commission recommended limiting the budget within Rs 1.89 trillion.

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“The final decision will be taken by the new government to be formed after the upcoming elections,” Shrestha said.

The National Resource Estimates Committee (NREC) under the NPC provides the annual budget ceiling to ensure compatibility between the annual budget and the periodic plan while maintaining financial stability and supporting economic growth.

According to the law, the government must not exceed the ceiling set by the NPC. In practice, however, the limit has often been breached. In the current fiscal year, the government announced a budget of Rs 1.964 trillion against the provided ceiling of Rs 1.9 trillion, exceeding the limit by around Rs 64 billion.

Almost every year, the government announces an inflated budget, which is later revised downward through a mid-term review. In the current fiscal year, the government reduced the budget by 14.06 percent, cutting Rs 276 billion from the initially announced amount.

For the next fiscal year, the NPC has projected revenue mobilisation of Rs 1.378 trillion. In the current fiscal year, the government had initially set a revenue target of Rs 1.480 trillion, which was later revised down to Rs 1.315 trillion.

Economists say ambitious revenue targets and unrealistic economic growth projections create unnecessary pressure on the economy, including the private sector, and may slow economic activities instead of stimulating them.

Professor Ram Prasad Gyanwali, a former head of the Central Department of Economics at Tribhuvan University, said such practices could invite economic instability.