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From ambitious budgets to spirited Republic Day celebrations, Nepal is buzzing with activity! Amidst economic aspirations and pro-monarchy protests, our nation is striding forward, navigating a landscape rich with challenges and celebrations. Let’s dive into this week’s highlights!
Economy & Development 💸
Nepal's ambitious budget for fiscal year 2025/26, totaling Rs 1.96 trillion, seeks to revitalize the economy with a 6% growth target, as outlined by Finance Minister Bishnu Prasad Paudel during his budget presentation KTM Post .
Key highlights of Budget 🗝️
💰 Total Budget: Rs 1.96 trillion for fiscal year 2025/26
💻 IT Sector: 75% income tax waiver on service exports
🚀 Startups: 5-year income tax exemption for businesses with turnover up to Rs 100 million
🌱 Green Energy: Tax exemptions on machinery for green hydrogen production; 5-year income tax holiday for green hydrogen producers
🛫 Tribhuvan International Airport (TIA): Rs 4.15 billion allocated to transform TIA into a boutique airport
⚽ Sports Development: Significant funding boost; New international-standard multipurpose stadium in Damak, Jhapa
🚗 Electric Vehicles (EVs): Only 1% customs duty on EV charging station equipment
🏥 Health Sector: Budget increased to Rs 95.81 billion; Focus on improved services and timely insurance claim settlements
With a focus on infrastructure development, digital transformation, and private sector engagement, the budget also aims to cap inflation at 5.5%. A substantial portion, Rs 582.83 billion, will be transferred to provincial and local governments via various grants and revenue sharing, based on recommendations from the National Natural Resources and Fiscal Commission Nepal News . Despite the incorporation of some private sector demands, concerns linger about the effectiveness of implementation, especially considering the current climate of political instability and potential corruption.
To stimulate growth, the government is prioritizing tax breaks for the IT sector, startups, and green energy initiatives. A 75% income tax waiver is offered on IT service exports, while startups with a turnover up to Rs 100 million will enjoy a five-year income tax exemption KTM Post . Additionally, Nepali industries are now allowed to invest abroad, using up to 25% of their export earnings to set up processing plants, marking a significant shift in investment policy MyRepublica . The budget also emphasizes revamping Tribhuvan International Airport into a boutique facility, with an allocation of Rs 4.15 billion to enhance its cultural representation KTM Post and introduces incentives for electric vehicles (EVs), including a 1% customs duty on EV charging station equipment.
In addition to these budget highlights, several other significant developments have emerged in Nepal. The government aims to bolster international competitiveness by allowing Nepali industries to invest abroad, permitting them to use 25% of their export earnings for overseas ventures MyRepublica . In the transportation sector, Nepal has sent its trains to India for maintenance, with the Indian government providing a temporary replacement train without air-conditioned coaches during the repair period KTM Post . While student retention rates have shown slight improvements, challenges remain in the education sector, with recent reports highlighting a decline in enrollment rates, raising concerns about overall quality and access MyRepublica . The health budget has received attention with a focus on improving healthcare services and settling insurance claims within a year, aiming for better health outcomes across the population THT . Collectively, these developments underscore the ongoing efforts and challenges that Nepal faces as it navigates its path toward growth and stability.
Social & Cultural ⭐
Nepal's 18th Republic Day was celebrated with grandeur at Tundikhel, where a special ceremony commemorated the historic achievement of establishing a republic after abolishing the monarchy. The event, attended by President Ramchandra Paudel, Vice President Ramsahay Prasad Yadav, Prime Minister KP Sharma Oli, and other senior leaders, featured cultural displays and military parades to honor the gains made during the 2006 People’s Movement KTM Post . Prime Minister Oli extended heartfelt wishes to all Nepali citizens, emphasizing the day's significance as a reminder of their long struggle for democracy THT Online .
Amid the celebrations, pro-monarchy protests unfolded across the capital, as tens of thousands rallied demanding the restoration of the monarchy and the declaration of Nepal as a Hindu state. Protests, organized by groups including the Rastriya Prajatantra Party (RPP), were largely peaceful but marked a resurgence of royalist sentiment AP News . Rally participants expressed dissatisfaction with the current political system and called for a return to monarchy, citing dissatisfaction with the performance of elected governments over the past 17 years. Security was heightened to prevent any potential clashes, and authorities allowed both pro-monarch and republican demonstrations to occur at separate locations MyRepublica .
In addition to the Republic Day festivities and protests, the country is currently grappling with significant environmental challenges as floods have disrupted transportation along the Narayanghat-Butwal highway, stranding hundreds of travelers THT Online . The floods swept away temporary diversions, leading authorities to work on establishing alternative routes. Furthermore, public transportation services in Gandaki Province have come to a halt due to protests against newly introduced ride-hailing regulations, highlighting growing unrest in the transportation sector MyRepublica . These developments underscore the ongoing challenges facing Nepal as it navigates its path amid celebrations and civil discontent.
Politics & Governance 🪧
The government of Nepal has placed a significant focus on enhancing disaster preparedness through an improved early warning system, particularly in response to anticipated rainfall-induced disasters this year. Minister for Energy, Water Resources, and Irrigation, Deepak Khadka, emphasized that timely communication regarding floods and landslides to local elected representatives is crucial for minimizing damage TRN Online . He noted that strengthening information flow via the Department of Hydrology and Meteorology will be vital in mitigating disaster impacts. The government’s proactive steps reflect a growing awareness of the need for better disaster risk reduction strategies as climate variability intensifies.
In budgetary matters, the government has decided not to increase salaries for civil servants for the upcoming fiscal year 2025–26, citing financial constraints. Finance Minister Bishnu Paudel announced that, while base salaries will remain unchanged, the monthly dearness allowance will rise from Rs 2,000 to Rs 5,000, effective from mid-July KTM Post . This adjustment aims to provide some relief amidst inflation, despite the government facing tight budgetary conditions that prevent a revision of basic pay scales this year. Such measures illustrate the ongoing challenges the government faces in balancing the needs of its workforce with fiscal responsibility.
Diaspora & Globalization 🌏
In a strategic move to attract international students, the government of Nepal has announced a new policy offering free visas for the full duration of the students' academic programs. Finance Minister Bishnu Prasad Paudel stated that the initiative aims to increase enrollment in Nepali universities while accompanying parents or guardians will be eligible for multiple-entry visas KTM Post . Furthermore, to enhance the overall quality and management of higher education, the government plans to introduce an umbrella law aimed at streamlining university operations, ensuring consistency in governance and academic structures across institutions. This policy is expected to help curb the trend of students seeking education abroad, promoting Nepal as a competitive destination for higher studies.
Did you know ❓
The Kathmandu Valley is one of the oldest continuously inhabited places in the world, with archaeological evidence indicating human settlement for over 2,000 years. This historical region boasts a rich tapestry of cultures, having been home to various ethnic groups and serving as a major trade hub between Tibet and the Indian subcontinent. Its ancient architectural marvels, including temples and stupas, showcase the valley's vibrant heritage, making it a UNESCO World Heritage Site and a living testament to Nepal's deep historical roots.
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