Kathmandu: Finance Minister Dr Swarnim Wagle has signalled a significant shift in the government’s approach to public welfare, announcing that the national health insurance program will undergo a comprehensive restructuring in the upcoming fiscal year’s budget.
Speaking at a meeting of the National Assembly’s Development, Economic Affairs, and Good Governance Committee, Dr Wagle admitted that the current model has become financially unsustainable in its present form.
He noted that while the government had allocated 10 billion rupees for health insurance last year, the volume of claims surged to between 25 and 30 billion rupees, creating a massive funding gap that has made it increasingly difficult for the state to clear its outstanding payments.
The Minister pointed toward a growing trend of unnecessary medical testing and systemic abuse, particularly within private hospitals, as a primary reason for the program’s financial instability.
To address these challenges, the government plans to “right-size” the initiative by introducing a more targeted, tiered structure.
Under this new framework, the state will continue to protect the rights of the underprivileged by subsidizing their basic healthcare. However, more affluent citizens will be required to transition into a contributory system.
Furthermore, Dr Wagle indicated that the government is viewed favourably toward diverting a portion of the “sin taxes” collected from tobacco and alcohol directly into the health insurance fund to ensure its long-term viability. He warned that without such structural changes, the entire insurance system risks total collapse.
Regarding the energy sector, Dr Wagle expressed deep concerns over the viability of the Budhi Gandaki Hydropower Project under its existing financial framework. Although he acknowledged the necessity of reservoir-based projects for the country’s energy security, he highlighted the alarming escalation in construction costs.
While typical hydropower projects in Nepal are built at a cost of 190 million to 220 million rupees per megawatt, the projected cost for Budhi Gandaki has spiked to nearly 500 million rupees per megawatt. This could push the total project cost to 600 billion rupees, a massive jump from the initial estimate of 200 billion. Consequently, the government is exploring options to bring in new investors by counting the 45 billion rupees already distributed in land compensation as the state’s equity in the project.
In terms of other infrastructure and regional development, the Minister stated that the upcoming budget will prioritize water supply projects that are near completion, with a potential for an additional allocation of up to 10 billion rupees to ensure they cross the finish line.
He also detailed plans to develop the Ram-Janaki circuit as a major religious and tourist corridor, linking it with broader infrastructure goals. To establish Janakpur as a premier international tourist hub, the government is engaging in high-level dialogue with India to strengthen the Janakpur-Ayodhya connection. This holistic plan includes upgrading roads and airports, improving water facilities, and fostering the development of hotels and a skilled hospitality workforce to support the expected growth in tourism.
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