Nepal has been granted a $100 million concessional loan from the Asian Development Bank (ADB) to enhance its fiscal management and promote the decentralization of public services. In a press release today, the ADB said that this loan aims to provide support for substantial expenditure and debt management reforms at the federal level, and efficient planning and management of resources at the subnational level. By assisting the country in achieving its structural fiscal transformation goals by 2025, this loan plays a crucial role.
The loan is part of the Strengthening Public Financial Management and Devolved Service Delivery Program, which aims to enhance the quantum and quality of capital spending, reform public enterprises to mitigate fiscal risks, digitize to enhance fiscal transparency and efficiency, leverage additional resources from development financing institutions, and implement a gender- and climate-responsive medium-term expenditure framework at the subnational level.
The program will also support the institutionalization and operationalization of devolved public services to strengthen fiscal federalism as outlined in the 2015 constitution. The program will help municipalities revise and update the property tax rate to boost revenue, implement a gender and climate responsive medium-term expenditure framework, and improve public investment management. It will also support the establishment of an IT-based model taxpayer registration system and public asset management system.
“This ADB program will introduce reforms to enhance the quantum and quality of capital spending, reform public enterprises to mitigate fiscal risks, digitize to enhance fiscal transparency and efficiency, leverage additional resources from development financing institutions, and implement a gender- and climate-responsive medium-term expenditure framework at the subnational level,” said ADB Public Management Economist Chandan Sapkota.
“The ADB program will support institutionalization and operationalization of devolved public services to strengthen fiscal federalism as outlined in the 2015 constitution,” said ADB Public Management Specialist Rachana Shrestha. “To help strengthen local governance and the delivery of devolved services, the program will strengthen policy reforms aimed at improving resource generation capabilities of subnational governments.”
ADB will also provide an additional $1.5 million technical assistance grant from its Technical Assistance Special Fund to support the implementation of policy actions and institutional strengthening. It will also support the implementation of a post-program partnership framework to guide the sustainability of the reforms beyond 2025.
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