Nepal’s business community is bringing a lengthy list of demands to the Shah government ahead of its first national budget, presented to parliament on 29 May, with private investment still well below levels needed to drive the growth the administration has promised.
Despite ample liquidity in the banking system and declining interest rates, businesses remain hesitant to expand or take on fresh loans. The construction sector is sluggish, market demand has softened, and government capital expenditure has fallen short of targets.
The private sector’s share of total investment fell to 19 per cent last year, down from a typical level of around 25 per cent, significantly denting revenue collection and pushing the government into greater dependence on public borrowing even for routine expenditures.
Finance Minister Swarnim Wagle has signalled that the budget will prioritise easing business conditions and reforming regulatory constraints on the private sector, with the government committed to repealing outdated laws and restructuring agencies that have hindered commercial activity. Finance Secretary Ghanashyam Upadhyay told a parliamentary committee that every unit of government spending should act as a catalyst for private investment, generating production and employment rather than crowding out business activity.
Business groups have called for tax simplification, lower rates for manufacturing industries, and greater policy consistency, arguing that restoring investor confidence is a prerequisite for achieving the government’s stated ambition of seven per cent economic growth.