Key Takeaways:

• Rs 37 billion budget failed after UML withdrew support
• Attempts to secure backing from opposition NCP also failed
• Province can collect revenue under Temporary Revenue Collection Act but cannot spend

DHANGADHI, JULY 17 The Sudurpashchim Provincial Government has entered a partial budget vacuum after failing to secure provincial assembly approval for its budget for the fiscal year 2026/27, leaving it unable to make public expenditures from the start of the new fiscal year. The budget, tabled on June 15 by Minister for Economic Affairs Bikram Singh Dhami, failed to pass after the government lost its majority in the Provincial Assembly. The political deadlock followed the withdrawal of support by the CPN-UML after Chief Minister Kamal Bahadur Shah dismissed the party's ministers from the provincial cabinet. Attempts by the Chief Minister to secure backing from the main opposition Nepal Communist Party (NCP) also failed, as the party refused to endorse the budget in its existing form. With the budget left unapproved, provincial government offices are unable to incur expenditure. However, officials said the province has avoided a complete budget shutdown as it had already enforced the Temporary Revenue Collection Act, 2024, allowing revenue collection to continue. Dhan Bahadur Rokaya, Under-Secretary at the Ministry of Economic Affairs, said the province remains authorised to collect revenue under the temporary legislation despite the failure to pass the budget. 'The province has not entered a complete budget vacuum. Government offices can continue collecting revenue under the existing rates, but they cannot spend funds until the budget is endorsed by the Provincial Assembly,' Rokaya said. Section 3 of the Temporary Revenue Collection Act permits the government to continue collecting revenue at previously approved rates during exceptional circumstances. The Ministry of Economic Affairs is preparing to issue directives to its subordinate offices to implement the provision until the budget impasse is resolved.