Nepal’s government has placed a major new bet on its long-neglected secondary cities. Under a scheme called the Intensive Urban Programme, Rs 88.33 billion (about €502 million) has been allocated to systematically develop and manage the market areas of around 300 towns across the country, part of a three-year action plan that ranks among the most ambitious urban efforts the country has attempted.
The program’s core idea is to treat small-town market areas as a single, coordinated problem rather than a scatter of unrelated fixes. It bundles market management, urban roads, road safety and drinking water under one umbrella, and crucially, it runs on a three-year, project-based budget rather than the usual one-year cycle. That structure is a deliberate attempt to escape the stop-start spending that has long stalled Nepali capital projects, where money is allocated in one fiscal year, lapses, and has to be allocated again. Officials say roughly Rs 1,150 billion (about €6.5 billion) would be mobilised over the full three years once the project pipeline is attached, even though this year’s budget book lists about Rs 286 billion (about €1.63 billion) for the broader road and urban sector.
The most consequential commitment is administrative rather than physical. The plan promises to compress the public procurement cycle from the current 18 to 21 months down to six or seven, a change that, if delivered, would matter as much as any single road or pipeline. Alongside it sit targets that ordinary residents can measure, most notably clean drinking water for 65 per cent of the population within three years and 90 per cent within five, plus dedicated funding for road maintenance and safety.
The program matters because of what it is trying to fix. After the 2017 municipal restructuring, Nepal’s urban footprint expanded dramatically as large rural areas were folded into new municipalities. By some measures, the share of land classed as urban jumped from under a quarter to roughly two-thirds, leaving hundreds of places carrying an urban label but only rural-grade infrastructure beneath it. The Intensive Urban Programme is, in effect, the delivery vehicle meant to finally put working services behind those labels. It builds on existing frameworks such as the National Urban Policy approved in late 2024, and it echoes more than a decade of World Bank and Asian Development Bank urban projects that upgraded drainage, solid waste systems and roads in Terai cities like Dharan, Janakpur, Nepalgunj and Siddharthanagar. If executed well, it could become the domestic, scaled-up successor that stitches those one-off interventions into a single nationwide effort.
The scheme is one plank of a notably ambitious national budget for the 2026/27 fiscal year, worth Rs 2,124.34 billion (about €12.07 billion) and built around a 7 per cent growth target. Within that, the road and urban envelope includes a nationwide road maintenance campaign worth Rs 28.52 billion (about €162 million), Rs 4.19 billion (about €23.8 million) for greening major cities, Rs 2.46 billion (about €14 million) for road safety and Rs 1.83 billion (about €10.4 million) for land development in identified cities. The details were laid out in the House of Representatives in June 2026 during deliberations on the Appropriation Bill, where Infrastructure Development Minister Sunil Lamsal defended the program against the perception that it was thinly funded, arguing that the modest annual figure simply reflects a much larger plan spread across three years.
The binding question, as with most Nepali infrastructure, is execution. The country’s problem has rarely been allocating money so much as spending it. The World Bank has found that capital projects routinely stall, with land acquisition for a single road taking around 35 months, nearly 150 per cent longer than planned. That is precisely why the procurement pledge is at once the most important and the most sceptically watched element of the package. The promise is large, the system it inherits is not encouraging, and the next three budget cycles, running through the late 2020s, will reveal which of the two prevails.