Nepal’s government has recorded a notable increase in capital expenditure during October, coinciding with the festival season, according to data released by the Financial Comptroller General Office (FCGO). The mobilisation of the capital budget rose by 4.21 percentage points over the past month, reaching 6.77 percent of the total allocation as of October 28.

Since mid-July, the government has disbursed Rs. 29.16 billion from the Rs. 431.10 billion earmarked for capital spending in the current fiscal year 2026/27. This marks a significant improvement compared to a month earlier, when only 2.56 percent (Rs. 11.05 billion) of the allocated capital budget had been utilised. Total government spending also surged to 19.25 percent of the overall estimated expenditure of Rs. 2,124.34 billion by late October, up from 11.94 percent recorded earlier in the fiscal year.

Revenue collection has similarly accelerated, jumping to almost 20 percent of the target by October 28 from around 13 percent a month prior. This figure surpasses the collection rate of approximately 17 percent reported during the same period last year.

The government’s fiscal progress contrasts with disruptions caused by the Gen Z movement on September 8 and 9, 2025, which had earlier tempered both revenue and budget spending. Capital expenditure stood at 4.95 percent (Rs. 20.17 billion) after the first three and a half months of that fiscal year, though total expenditure hovered around 20 percent—comparable to current levels.

A senior official from the Ministry of Finance attributed the improved budget execution to increased decentralisation. Agencies no longer require central approval from the ministry for project proposals, and multi-year projects can proceed based on three-year budget projections under the Mid-Term Expenditure Framework. Enhanced payment processes have also expedited contractor disbursements.

Finance Minister Dr. Swarnim Wagle has emphasised the government’s commitment to strengthening budget execution, which has historically lagged. The current political stability supported by a majority government, alongside efforts to enhance government integrity, appears to have fostered higher taxpayer compliance. The finance ministry official noted a dual sentiment among taxpayers—combining hope with caution—reflecting a growing trust in government management despite the absence of increased enforcement measures.

Revenue collection is estimated to have grown by 18 to 20 percent this fiscal year. By comparison, in fiscal year 2024/25, capital expenditure had reached 8.77 percent after mobilising Rs. 30 billion from a Rs. 352.35 billion budget. In fiscal year 2023/24, total budget utilisation stood at 17.28 percent of Rs. 1,751.31 billion, with capital expenditure at 8.5 percent of Rs. 302.07 billion, and revenue collection at 16 percent of Rs. 1,422.54 billion.

Former Vice-Chairman of the National Planning Commission, Dr. Prakash Kumar Shrestha, acknowledged progress but stressed the need for further reforms in capital budget execution. He highlighted the adoption of online tendering systems and prompt responses to project challenges as positive steps.

The Ministry of Finance also indicated plans to tender projects valued at approximately Rs. 1,000 billion in the near term, aiming to sustain momentum in development spending.