The finance ministry has estimated a budget outlay of Nu 109.35 billion for the fiscal year 2025-26, the second year of the ambitious 13th Plan.
This is according to the ministry’s budget call notification for the fiscal year 2025-26.
The proposed outlay includes Nu 53.79 billion for capital expenditure and Nu 55.56 billion for recurrent expenditure, accounting for 21 percent of the total 13th Plan budget.
The ministry has projected total resources of Nu 89.35 billion for the year, comprising Nu 67.28 billion from domestic revenues and Nu 22.07 billion in external grants.
The budget outlay for the fiscal year 2025-26 is 12 percent higher than this fiscal year 2024-25. In this fiscal year 2024-25, the ministry had allocated Nu 97.63 billion. This included Nu 50.81 billion allocation for the recurrent expenditure and Nu 38.32 billion for capital.
The fiscal deficit, a gap between the government’s total revenue and total expenditure, which needs to be filled with borrowings, was expected to remain at 5.85 percent of gross domestic product in the fiscal year 2025-26. This is equivalent to Nu 20 billion.
To bridge the deficit, the government plans to rely on external and domestic borrowings.
The ministry has emphasised the need for sustainable deficit management through careful prioritisation of capital proposals, setting budget ceilings for agencies based on available financing.
The ministry has urged ministers and heads of the agencies to lead and engage closely in the budget preparation process for effective and efficient prioritisation of programmes, allocation of resources, and greater accountability.
According to the finance ministry, the budget proposals require an aligned annual work plan, which is due to be submitted to the ministry by January 27 this year, reflecting deliverables (results and key performance indicators) agreed with the Cabinet Secretariat for the fiscal year 2025-26.
Agencies must submit budget proposals by March 15, adhering to the budget preparation guidelines.
To address the growing fiscal deficit, the ministry has asked all government agencies to submit budget proposals aimed at driving economic growth while reducing the deficit. “Projects or activities lacking economic and social returns should be rationalised including the donor-funded projects.”
The ministry has introduced a new initiative to incentivise agencies that achieve increased revenue generation in the fiscal year 2025-26 through innovative operating models. Successful agencies will receive augmented recurrent budget allocations in the following fiscal year.
This effort is part of the ongoing transformation initiative aimed at fostering an “enlightened entrepreneurial bureaucracy”, the ministry stated.
In line with this, budgetary agencies are required to review their existing operating models and propose opportunities for innovative business models that promote sustainability.
The capital budget ceiling for budgetary agencies, including external financing, was approximately 20 percent of the 13th Plan outlay.
The ministry has reminded the budgetary agencies to prioritise and expedite the implementation of approved donor funded projects to ensure timely completion of the projects financed by development partners.
In addition, the restoration and reconstruction of public infrastructure damaged by the disaster will be prioritised within the prescribed ceiling.
Proposals for constructing new office buildings will be restricted unless backed by confirmed external grants and accompanied by comprehensive needs assessments.
The finance ministry will continue to rationalise vehicle procurement to create fiscal space for other urgent priorities. Critical replacements, including ambulances, school buses, fire trucks, and garbage trucks, will require specific approvals.
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