Banking Khabar / The Ministry of Finance has intensified work on preparing the national budget. A large team led by the Finance Minister and senior officials is actively engaged in the process. The ministry has also called for suggestions from various sectors to support the formulation of the upcoming budget.
The national budget is scheduled to be presented on Jestha 15. However, rising global conflicts are expected to increase inflationary pressure, with potential disruptions in the supply of petroleum products.
As outlined in the ruling party’s manifesto, the government is also under obligation to return funds to victims of cooperative fraud within 100 days of its formation.
Mounting Global Uncertainty Raises Economic Concerns
Escalating tensions in the Middle East have begun to significantly impact the global economy. The conflict has created widespread pressure on international trade, transportation, production, and consumer goods.
The instability has particularly disrupted global oil supply chains. Rising energy prices in the international market are adding pressure on essential sectors such as transportation, manufacturing, and daily consumption. As risks in oil transport increase, prices of basic goods including food, vegetables, milk, and construction materials—are expected to rise further.
Middle East Crisis and Its Impact on Nepal’s Economy
Middle Eastern countries remain key trade and employment partners for Nepal. Ongoing conflict has disrupted export-import activities, while rising production and transportation costs are directly affecting commodity prices.
Millions of foreign workers in the region are facing growing job insecurity. If the conflict continues for an extended period, global remittance flows could decline, with serious implications for economies heavily dependent on foreign income.
The situation is particularly concerning for Nepal, where around 1.7 million workers are employed in Gulf countries. Their safety and employment are increasingly at risk.
Monthly remittance inflows to Nepal exceed NPR 200 billion, and any disruption could severely affect economic stability. Remittances currently account for approximately 25–30 percent of Nepal’s Gross Domestic Product (GDP), making the economy highly vulnerable to external shocks.
A prolonged conflict involving major global powers such as the United States, Israel, and Iran could further weaken remittance inflows, adding pressure on Nepal’s external sector.
There is also a growing possibility that Nepali migrant workers may be forced to return home, potentially increasing domestic unemployment and creating additional social and economic strain.
Domestic Financial Pressures and Structural Challenges
Cooperative sector fraud cases have emerged as a serious financial challenge, with total liabilities estimated in billions rather than millions. Meanwhile, government revenue performance remains weak and discouraging.
The current economic environment reflects multiple pressures, including rising inflation, supply chain disruptions, and currency depreciation against the US dollar. These factors have contributed to higher living costs and external sector imbalances.
A widening gap between foreign currency inflows, such as exports, remittances, foreign investment, and aid—and outflows through imports has intensified pressure on foreign exchange reserves. This has led to liquidity constraints in the banking system and rising interest rates.
Policy Priorities for Economic Stability and Growth
Economic priorities include post-disaster reconstruction, modernization of agricultural production, capital market development, and attracting domestic and foreign investment. Hydropower expansion and export promotion, along with tourism sector development, are also key focuses.
Additional priorities include improving public capital expenditure efficiency, strengthening financial discipline, effective public debt management, and controlling illegal financial transactions such as hundi.
These measures are considered essential to ensure financial stability and support long-term, sustainable economic growth.
