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<\/p>\nNepal will need a transparent fiscal architecture to achieve development goals through its new federal system of government, said the World Bank in its latest release.<\/p>\n
\u201cAs Nepal prepares for an ambitious shift from a unitary to a federal system of government, closer attention to sequencing political, financial and administrative decentralization will be key,\u201d stated the World Bank in its latest report titled \u2018Nepal Development Update\u2019, released on September 17, 2017.<\/p>\n
It further said that the country\u2019s new fiscal federalism system is suggesting marked asymmetry between stronger decentralization of spending responsibilities and relatively unchanged low decentralization of tax collection powers.\u00a0\u201cSimilar imbalances hold true between regions across the country,\u201d it added.<\/p>\n
According to the World Bank, a large proportion of Nepal\u2019s federal spending would likely be passed on to subnational governments starting from FY 2018. It says such a move would lead to increased public spending in the country.<\/p>\n
Commenting on the case, Takuya Kamata, the\u00a0World Bank\u2019s Country Manager for Nepal said, \u201cThe subnational governments will play an increasingly critical role in Nepal\u2019s public expenditures. A system of fiscal transfers that is designed for transparency and predictability and supported by a small set of simple rules could go a long way in helping meet the development objectives of federal Nepal.\u201d<\/p>\n
On the other side, the World Bank also cautions that unaddressed issues in the new federal system might challenge the budget execution, especially in the coming fiscal year.<\/p>\n
According to the report, recent floods in mid-August have largely impacted the rebounding economic growth of Nepal.<\/p>\n
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The latest update pointed at the issues related to Nepal Government\u2019s budget planning.<\/p>\n
\u201cMore than 60 percent of the capital budget was spent in the last quarter of the fiscal year, while expenditure remained significantly below the planned budget, a perennial problem in Nepal. The era of balanced budgets has ended with the fiscal deficit reaching an estimated 3.3 percent of GDP in FY 2017 and expected to increase going forward as well,\u201d the Nepal Development Update said.<\/p>\n
With regard to trade, the report noted that the country\u2019s import growth remains strong, while exports and remittances are expected to remain sluggish.<\/p>\n
The World Bank releases the Nepal Development Update twice in a year with a prime focus on the country\u2019s economic development over the preceding months, placing them in a longer-term and global perspective.<\/p>\n
This report is for the business community, policymakers, analysts and professionals engaging in economic debates related to the country and the public.<\/p>\n
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Nepal will need a transparent fiscal architecture to achieve development goals through its new federal system…<\/span><\/p>\n