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    Trash barrier installed to capture floating waste in Bagmati River

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World Bank suggests legal, institutional reforms to boost fiscal federalism in Nepal

Metakhabar by Metakhabar
June 16, 2023
in Business, Featured-news, International, News
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The World Bank (WB) has suggested Nepal that it ensured legal and institutional reforms for effective enforcement of fiscal federalism. Releasing a report on ‘Nepal Fiscal Federalism Update, 2023′ in the capital city on Thursday, the WB said the existing structure of concurrent responsibilities on expenditure and service delivery among the three tiers of government provides overlapping mandates to different tiers of government and hinders responsiveness to citizens’ demands. According to the report, the unclear division of tax responsibilities undermines the materialization of provincial and local governments’ own-source revenue potential.

Simplifying the division of tax responsibilities among the three tiers of government would help increase the effectiveness of tax administration, it stressed, adding that there is a need to strengthen institutional capacity and the coordination arrangements between the key federal institutions responsible for fiscal federalism; and of them with the provinces and local governments. “The intergovernmental fiscal transfer (IGFT) mechanisms need to be revised to make them more effective and introduce more flexibility,” the report stated. The WB observed that considerable progress was made on sub-national PFM performance. The government has been further suggested to reinforce systems to improve the budget credibility and delivery of services by province and local government (PLGs) by strengthening the alignment of periodic development plans, MTEFs, and annual budgets.

Development of a fiscal federalism roadmap based on relevant government strategies such as the Public Financial Management Strategy (2017) and the Capacity Development Action Plan on Fiscal Federalism (2022); reinforcement of the Inter-Governmental Fiscal Transfer system; establishment of consolidated PFM performance database at the federal level to enhance the monitoring and evaluation of the overall performance of public financial management at province and local levels and strengthening of the capacity of PFM human resource to carry out PFM-related functions are other suggestions. The WB has made a comprehensive review of progress in fiscal federalism in Nepal. Releasing the report, World Bank Country Director Faris-Hadad Zervos mentioned that province and local governments are significant foundations to sustainable service delivery. Both province and local levels must have adequate financial resources and spending capacity, he stressed.

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Booking of bus tickets for Dashain from Monday
Featured-news

Over 576,000 people leave Kathmandu Valley since Ghatasthapana

by Metakhabar
October 20, 2026
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Kathmandu, Oct. 20: More than 576,000 people have left Kathmandu Valley since Ghatasthapana, the first day of the 10-day Dashain...

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Mahanawami festival today

Mahanawami festival being celebrated today

October 20, 2026
Beni-Jomsom-Korala road damage is about one billion rupees

Beni-Jomsom-Korala road damage is about one billion rupees

October 20, 2026
Mahanawami festival today

Mahanawami festival today

October 20, 2026
President Paudel visits nine major goddess shrines on Maha Ashtami

President Paudel visits nine major goddess shrines on Maha Ashtami

October 20, 2026

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