World Bank creates support for fiscal federalism in the nation

World Bank creates support for fiscal federalism in the nation

The World Bank has accepted the Second Programmatic Fiscal and Public Financial Management Growth Policy Credit (DPC2) Project that encourages the Nepal government’s efforts to establish a framework to move towards fiscal federalism and develop the policy framework for public financial management.

The execution of reform actions under the $100 million project is coordinated by the Ministry of Finance. It develops on reforms supported under the first Development Policy Credit Project that was approved in March 2018, as per a media release.

This DPC series supports reforms to improve Nepal’s federalism agenda, under two pillars. The first pillar encourages measures to establish fiscal federalism through different legislation, policies, and rules. Umbrella legislation, enacted at the federal level, will guide budget performance and improve the accounting and financial reporting framework and will form the basis of model laws to be adopted by local governments, to govern their budget processes.

The second pillar encourages reforms to strengthen the policy framework for public financial management at the sub-national levels. This can be achieved through legislation and regulations that govern the fund’s cycle and promotes transparency and responsibility to citizens, guides the planning of the Medium-Term Expenditure Framework, expenditure control, and supports the development of a revenue collection system. These reforms also include gender-responsive budgeting and measures to address Nepal’s vulnerability to climatic shocks and improve disaster risk management.

“We are here to help Nepal’s federalism and development narrative, which requires our sustained involvement with the government of Nepal along with the country’s development partners,” the release has quoted Idah Z Pswarayi-Riddihough, World Bank country director for Maldives, Nepal and Sri Lanka, as saying.

“As guided by the Country Collaboration Framework for Nepal, this project will effectively contribute to strengthening public institutions.”


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