Nepal's annual budget ritual has, for too long, followed a familiar script: a long list of projects that never get built, schemes that never reach those they are meant to serve, and fiscal targets that quietly disappear before the year ends. The budget scheduled for Jestha 15 (May 29, 2026) appears to be attempting something genuinely different, and the signals coming from Finance Minister Dr. Swarnim Wagle are worth taking seriously.

The framing this year is not just about numbers. The government is talking about governance as an economic variable, and that shift in language matters more than any single line item. The most consequential idea in this year's pre-budget signaling is "Mission Mode" for infrastructure. On the surface, it sounds like administrative jargon. In practice, it represents a direct acknowledgment of what every Nepali already knows: that the problem with Nepal's development is rarely the budget allocation, and almost always the delivery.

Nepal has consistently allocated 30–35 percent of its total budget to capital expenditure over the past decade, yet actual capital spending has rarely exceeded 70 percent of those targets. In fiscal year 2022/23, capital expenditure absorption stood at just 68 percent, with large infrastructure projects being the primary offenders. The Kathmandu-Terai Fast Track, a project conceived over two decades ago, symbolises this failure most vividly. It should have been completed years ago. It is still not done.

The budget's stated intent to prioritise completion of strategic ongoing projects, including the Fast Track, Pushpalal Mid-Hill Highway, and Hulaki Road, over the launch of new ones is exactly the right instinct. Nepal does not suffer from a shortage of project ideas. It suffers from a shortage of project completion. Holding project chiefs accountable and simplifying land acquisition and procurement within defined timelines is an approach borrowed from results-based management, and there is good reason to believe it could work here if applied with genuine political will.

The second thread running through this budget is the focus on the middle class, which is both politically astute and economically necessary. Nepal's middle class, roughly estimated at 15–20 percent of the population by various household surveys, has been the quiet engine of domestic consumption, remittance deployment, and small business formation. It has also been the primary victim of the "middlemen and syndicates" that Dr. Wagle explicitly called out in his pre-budget remarks.

Digitising essential services, from business registration to tax payment to land records, is not a technical upgrade. It is an anti-corruption intervention. Countries that have moved these touchpoints online have seen measurable reductions in informal payments and processing times. In Georgia, a similar digital services push in the early 2000s cut business registration from 25 days to one day and drove a significant drop in small-business bribery complaints. Nepal does not need to reinvent this model; it needs to implement it with consistency.

The "Investment Express" policy, designed to simplify approvals and reduce the time cost of doing business, addresses what the World Bank's Doing Business data (prior to its discontinuation) consistently flagged: Nepal ranked 94th out of 190 economies in ease of doing business in 2020, with starting a business and dealing with construction permits among the weakest categories. Streamlining these processes is not a concession to business interests. It is a prerequisite for job creation.

Perhaps the most forward-looking element of the budget framework is the plan to tap Green Bonds, Infrastructure Bonds, and Diaspora Capital. This matters because Nepal's fiscal position is constrained. Revenue collection as a percentage of GDP has hovered around 22–24 percent in recent years, and foreign aid and concessional borrowing cannot indefinitely fill the gap between ambition and resources. Nepal's diaspora remittances exceeded NPR 1.17 trillion in fiscal year 2023/24, or roughly 22 percent of GDP, making it one of the highest remittance-to-GDP ratios in Asia. Yet almost none of this capital is being channelled into productive domestic investment in a structured way. A well-designed Diaspora Bond, with transparent governance and reasonable returns, could mobilise even a fraction of this flow into infrastructure financing and represent a meaningful shift in how development is funded.

Green Bonds, similarly, align with the global investor appetite for climate-aligned assets. Nepal, with over 40,000 megawatts of hydropower potential and significant ambitions in clean energy, is a natural candidate for this instrument. The credibility of such issuances will depend on the governance reforms accompanying this budget, which is why the anti-money laundering emphasis and revenue leakage controls are not peripheral concerns. They are the foundation that makes innovative financing credible. The inclusion of "Soft Power" as one of five guiding principles is unusual in a budget framework, and it is a welcome development. Nepal's international economic presence has been punching below its weight for years. Tourism, which contributed nearly 7.9 percent of GDP before the pandemic, has been recovering but remains short of its potential. Cultural exports, geographic positioning between India and China, and the skills of the Nepali diaspora are all underutilised assets.

Economic diplomacy, if pursued systematically, can open market access for Nepali goods, attract foreign direct investment into infrastructure and energy, and build the kind of bilateral relationships that smooth the path for trade agreements. This is not soft power in the ceremonial sense. It is a complement to the economic reform agenda, and its inclusion in the budget framework signals that the government understands the connection. The decision by the National Planning Commission's LDC Implementation and Coordination Committee to recommend a three-year delay in Nepal's graduation from Least Developed Country status deserves a careful reading, because it is easy to misread as a sign of weakness.

Nepal was on track for graduation by November 2026. The disruption caused by the "Gen-Z" protests in August 2024 and the resulting hit to business confidence, combined with the precedent set by Bangladesh's own graduation delay request, created a genuine policy dilemma. The private sector's concern is concrete: graduation would trigger the loss of preferential trade access, including duty-free entry under the EU's Everything But Arms arrangement and other GSP schemes, for exports like garments, carpets, pashmina, and handicrafts. These sectors employ hundreds of thousands of Nepali workers, many of them women.

The argument that Nepal's industrial base is not yet competitive enough to survive graduation without preferential cushioning is not a comfortable admission, but it is an honest one. Prematurely graduating into full WTO market competition while domestic productivity and export sophistication remain low would risk damaging the very export industries the government is trying to strengthen. A three-year extension, used productively, is an opportunity to build the manufacturing capabilities and export diversification that would make graduation, when it comes, genuinely sustainable rather than ceremonial. The key word is "used productively." The delay buys time. Whether that time translates into structural readiness depends on whether the manufacturing and trade policy environment actually improves during this window. The budget's emphasis on the investment climate and private sector confidence is directly relevant here.

Nepal's reform cycles have a pattern: strong rhetoric at the start of a fiscal year, structural inertia through the middle, and a scramble of spending in the final quarter that produces poor-quality outputs and auditor complaints. The framework Finance Minister Dr. Wagle has outlined is coherent and the priorities are well-chosen. The question every informed observer is asking is not whether the plan makes sense. It does. The question is whether the institutions, the accountability mechanisms, and the political will exist to deliver on it.

Mission Mode for infrastructure, digital transformation for services, innovative financing for investment, and a strategic pause on LDC graduation are all defensible and even commendable positions. What they require, in addition to good policy design, is a government that follows through past the announcement stage. Jestha 15 will tell us what is planned. The months after will tell us what is real.