Nepal’s FY 2083/84 Federal Budget: Digitalization, E-Governance, AI and Digital Transformation
On 29 May 2026, the Government of Nepal presented an NPR 2.124 trillion budget for FY 2083/84, allocating NPR 1,270.58 billion to recurrent expenditure, NPR 431.10 billion to capital expenditure, and NPR 422.64 billion to financial management. The budget allocates NPR 5.93 billion to the ICT sector, NPR 4 billion to science, technology, and innovation, and NPR 500 million for the Nepal Enterprise Facility to support startups and SMEs. The budget recognizes ICT and artificial intelligence (AI) as transformative forces across governance, finance, trade, investment, and society, while acknowledging both their opportunities and challenges (Clause 4). It emphasizes leveraging these technologies to drive inclusive growth, strengthen competitiveness, and accelerate Nepal’s digital transformation.
To promote digital payment, the budget introduces a 10% VAT refund on transactions made through digital payment systems (Clause 7(f)) and proposes legal and regulatory reforms to support innovation, technology-driven governance, intellectual property protection, and digital business operations (Clause 10). It also proposes the establishment of the “Matribhumi Fund” to support strategic national investments, including the development of an AI Factory, recognizing AI infrastructure as a national priority (Clause 15).
The government plans to expand ICT infrastructure, strengthen digital public infrastructure and e-governance systems, and maintain 66% ownership of Nepal Telecom while divesting the remaining shares to the public to help develop Nepal as a regional technology hub. Additional measures include facilitating foreign investment in ICT services, creating a legal framework for remote work for foreign employers, centralizing software procurement across public agencies, establishing a FinTech Marketplace under Nepal Rastra Bank, and expanding services available through the Nagarik App (Clause 17).
The budget also outlines a dedicated AI development agenda, including the establishment of Nepal’s first Sovereign AI Compute Centre and the procurement of high-performance AI processing units to provide affordable computing resources. Leveraging Nepal’s hydropower potential for sustainable AI computing, the government also aims to promote AI-enabled digital exports, support internationally recognized Nepali AI researchers through fellowships, and strengthen foundational disciplines such as mathematics that are critical to AI development (Clause 18).
Digitalization has been prioritized across multiple sectors, including agriculture, forestry, foreign investment facilitation, startups, financial reforms, and education (Clauses 24-30). The budget also emphasizes research and innovation, the development of a knowledge economy, technology-enabled public service delivery, governance reforms, and digital infrastructure to enhance connectivity and economic transformation (Clauses 35, 39, and 45).
Overall, the budget positions digital transformation as a central pillar of Nepal’s economic modernization and public sector reform agenda. Its strong focus on ICT infrastructure, digital governance, the digital economy, and emerging technologies such as AI signals a strategic shift toward a more innovation-driven economy. Realizing these ambitions, however, will depend on effective implementation, institutional coordination, sustained political commitment, and strong transparency and accountability mechanisms. Ensuring that these initiatives remain rights-based, citizen-centric, and inclusive will be critical to delivering equitable and meaningful outcomes.
|
|
|
Government Moves to Centralize Digital Governance Under New IT Office at PMO
The government has begun establishing a “Information Technology and Electronic Governance Office” under the Prime Minister’s Office (PMO) to unify all digital governance functions. As part of this restructuring, key bodies, including the Department of Information Technology, Integrated Data Management Center, and National Cyber Security Center, are moved under the PMO. The move aims to reduce duplication, integrate scattered systems, and accelerate digital transformation.
However, the transition has created administrative confusion and delayed major projects, including the Nepal Digital Transformation Project, due to unclear roles between the PMO, Ministry of Communications, and development partners. While the government argues the reform will improve coordination and efficiency, experts and former ministers warn that excessive centralization may weaken effectiveness if the mandate, autonomy, and capacity of the new body are not clearly defined.
Thematic Committee Pushes for Digital Restructuring in Communication Sector
A meeting of the Information and Communication Thematic Committee under the Federation, Province, and Local Level Coordination Act, 2020, has taken key decisions to restructure Nepal’s communication sector in line with federalism.
Chaired by Minister Dr. Bikram Timilsina, the meeting focused on improving coordination, removing legal overlaps, updating outdated laws, and advancing digital integration across government levels. It stressed the need for clearer division of responsibilities, transparent advertising systems, and improved media governance. Major decisions include developing an integrated digital system for media registration and regulation, amending key media laws, and streamlining online media renewal processes. The committee also agreed to modernize postal services, strengthen broadband expansion through the Rural Telecommunications Fund, and promote Nepal’s film and digital content industry.
Foreigners Arrested in Nepal for Alleged Online Scam
Nepal Police have arrested around 15 Bangladeshi nationals in Thamel, Kathmandu, on charges of online blackmailing and illegal activities. According to the Kathmandu Valley Crime Investigation Office, the suspects were staying in a hotel in Thamel and allegedly used fake Facebook accounts posing as foreign models and young women to befriend and scam citizens from Bangladesh and India. The group, staying in Nepal visit visas, was found to be engaged in activities beyond their stated purpose of stay. The police handed them over to the Immigration Department for further investigation and legal action under the Immigration Act.
Meta Settles US School Lawsuit Over Social Media Harm Claims
Meta has reached an out-of-court settlement with a US Kentucky school district that had sued the company over alleged mental health harms linked to Instagram. The Breathitt School District was seeking damages and policy changes, arguing that social media platforms were intentionally designed to be addictive and contributed to anxiety, depression, and self-harm among students. The case was part of a broader wave of lawsuits involving more than 1,200 US school districts targeting Meta, TikTok, Snap, and YouTube. Meta described the resolution as amicable, though it did not disclose settlement terms.
|
|
|
Digital Rights Weekly is a week-based update on Digital Rights and ICT issues, that happened throughout the week, compiled and analyzed from the digital rights perspective by Digital Rights Nepal (DRN). DRN is a not-for-profit initiative dedicated to the protection and promotion of digital rights, including the right to online freedom of expression and association, online privacy, access to information, and related issues such as internet governance, cyber laws/policies, and cyber securities in Nepal.
|
|
|
|
|
