04/05/2026
Advancing Tax Justice, Managing Debt, and Reframing NepalтАЩs Fiscal Future
Policy Dialogues | TaxED Alliance, TAFJA Nepal & ActionAid | 2-3 May 2026
Policymakers, parliamentarians, economists, journalists, civil society leaders, and regional partners convened in a series of policy dialogues - including the twoтАСday dialogue тАЬFrom Budget to the Economy: Breaking the BarriersтАЭ - to address the widening gap between NepalтАЩs budgets and real economic outcomes as the country prepares for its upcoming national budget and LDC graduation.
Key discussions and agenda highlights focused on NepalтАЩs regressive tax structure and heavy reliance on indirect taxes, the rapid rise of domestic and external public debt and mounting debtтАСservicing pressures, deepтАСrooted institutional and governance barriers, and the urgent need to realign the budget toward productive and social sectors such as education, health, energy, agriculture, and decent employment.
Core messages emphasized that NepalтАЩs fiscal challenges are structural, not technical: weak direct taxation, informality, and underтАСtaxation of wealth are constraining fiscal space; rising debt servicing is crowding out social spending; and without governance reform and policy coherence, fiscal stability alone will not deliver inclusive growth.
Key advocacy asks called for progressive income, wealth, capital gains, and inheritance taxation; reduced dependence on regressive indirect taxes; stronger parliamentary oversight of budgets and finance acts; prudent, projectтАСlinked borrowing and debt sustainability frameworks; curbing wasteful recurrent expenditure; tackling tax leakages and informality; and adopting a transformative, genderтАСresponsive, and employmentтАСcentred budget framework.
Facts and findings highlighted that taxes contribute over 90% of total revenue, with more than 70% from indirect taxes; public debt has risen sharply, with debt servicing exceeding 30% of revenue in recent years; wealth is highly concentrated (the top 10% hold nearly 60% of total wealth); and weak fiscal governance and public expenditure inefficiencies continue to undermine development outcomes.
Way forward: The dialogues reinforced that tax justice, debt justice, and budget accountability must move together to protect social spending, finance public services, and advance equitable and sustainable development in Nepal.