Nepal: Strengthening Public Management Program

Sovereign Project | 36172-063

Summary

The program seeks to promote an enabling environment in Nepal for the effective delivery of public goods and services, especially at the local level. It will do this by strengthening national and local linkages in public financial management (PFM), mitigating fiduciary risks through greater transparency and public participation, modernizing procurement systems, and enhancing the effectiveness of oversight and accountability agencies. The program will support efforts by the Government of Nepal to reform budget, fiscal and fiduciary risk management at the subnational or local government level (district development committee [DDC], municipality and village development committee [VDC]), public procurement, and oversight and accountability institutions at the national level. The program is aligned with ADB's Nepal country partnership strategy for 2010-2012, which seeks to enhance transparency and accountability, strengthen local governance, and increase the effectiveness of service delivery.

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Project Name Strengthening Public Management Program
Project Number 36172-063
Country Nepal
Project Status Approved
Project Type / Modality of Assistance Grant
Technical Assistance
Source of Funding / Amount
Grant 0305-NEP: Strengthening Public Management Program
Asian Development Fund US$ 21.00 million
TA 8173-NEP: Supporting the Strengthening Public Management Program
Technical Assistance Special Fund US$ 500,000.00
Department for International Development US$ 2.50 million
Grant 0368-NEP: Strengthening Public Management Program
European Union US$ 2.95 million
TA 8173-NEP: Supporting the Strengthening Public Management Program (Supplementary)
European Union US$ 2.95 million
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Partnerships
Sector / Subsector

Public sector management - Decentralization - Public administration - Public expenditure and fiscal management

Gender Equity and Mainstreaming Some gender elements
Description The program seeks to promote an enabling environment in Nepal for the effective delivery of public goods and services, especially at the local level. It will do this by strengthening national and local linkages in public financial management (PFM), mitigating fiduciary risks through greater transparency and public participation, modernizing procurement systems, and enhancing the effectiveness of oversight and accountability agencies. The program will support efforts by the Government of Nepal to reform budget, fiscal and fiduciary risk management at the subnational or local government level (district development committee [DDC], municipality and village development committee [VDC]), public procurement, and oversight and accountability institutions at the national level. The program is aligned with ADB's Nepal country partnership strategy for 2010-2012, which seeks to enhance transparency and accountability, strengthen local governance, and increase the effectiveness of service delivery.
Project Rationale and Linkage to Country/Regional Strategy

Nepal has made substantial progress towards establishing lasting peace and stability since the decade-long civil conflict ended in 2006. However, the transition to a new political, social and economic order the aspirations of the Nepali people that underpinned the People's Movement of April 2006 has been slower than expected due to the difficult and complex task of drafting a new constitution. While the country has achieved significant economic and social development objectives in the last decade and a half steady economic growth, sharp reduction in income poverty and improving social indicators such as life expectancy, maternal and child mortality, and literacy and enrollment rates there is a need to significantly improve the delivery of public goods and services, especially to the poor and disadvantaged, to gain greater public trust and facilitate the ongoing peace process.

Several analysts point to weak governance as a key constraint to the post-conflict economic recovery of Nepal and its further growth and development. The country ranks below the South Asian average on all six of the World Bank's governance indicators. Key areas of weakness include gaps in public financial management (PFM) at the national and local government level, budget and fiscal management weakness at the local government level, inefficient public procurement system, and weak oversight and accountability institutions. While the government is making efforts to address these weaknesses, there are still certain gaps in both the national and sub-national PFM reforms resulting in persistent PFM deficiencies at the local government level. These gaps include lack of synchronization and linkages between reforms at the national and local government levels, for example, in the areas of budget and fiscal management. To address these deficiencies, there needs to be a comprehensive and integrated approach to PFM reforms at the national and sub-national levels. Close and clear linkages between PFM reforms at the national and local government levels are essential for tangible and sustainable results in terms of improved PFM and reduced fiduciary risks. Improving the PFM and fiduciary environment both at the national and local government levels is an important prerequisite for achieving sustained improvements in public service delivery, development effectiveness and the overarching goal of poverty reduction.

In this context, the Strengthening Public Management Program will help address the PFM gaps outlined above, implement the government's Public Financial Management and Fiduciary Risk Reduction (PFMFRR) Action Plan and deepen the various ongoing PFM reform measures. The Program will support critical PFM and fiduciary reforms at the national and local government levels to promote fiscal sustainability at the local government level, implement the integrated PFMFRR Action Plan, enhance the transparency, economy and efficiency of public procurement at the national and local government level, and reduce corruption risks in public institutions by strengthening the capacity of anti-corruption and accountability institutions.

The Program is fully in line with the priorities of ADB's Country Partnership Strategy (2010-2012) and the government's Three-year Interim Plan (FY2011-FY2013). Both of these strategy and plan documents seek to enhance transparency and accountability, strengthen local governance, and increase the effectiveness of public service delivery.

Impact Public goods and services are delivered more effectively in Nepal, especially at local government levels.
Project Outcome
Description of Outcome The efficiency, transparency, and integrity of Nepal's public finances at the national and local government levels are enhanced.
Progress Toward Outcome Technical Audit workshops and Corruption Vulnerability Diagnostic (CVD) is ongoing and expected to complete by October 2015.
Implementation Progress
Description of Project Outputs

Local government budget and fiscal management improved

Fiduciary risk management strengthened at the local government level.

Public procurement system enhanced.

Institutions for oversight and accountability strengthened.

Status of Implementation Progress (Outputs, Activities, and Issues)

MTBF Framework completed. Implementation at MoFALD planned for FY 2015-16.

MARS is under development at KMC.

eGP implementation is expected to be completed by Q3 2015

Internal draft report on Assessment of Nepal's Anti-corruption Strategy has been submitted to OPM identifying the gaps and recommendations.

Workshops and activities related to NVC are in progress.

Local PEFA is infinal stage with estimated completion during Q3 2015.

Local level PETS is in progress with estimated completion within Q4 2015.

Internal Audit support to local level in progress with capacity building planned during Q3 and Q4 2015.

Geographical Location
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design The Program was designed with wide stakeholder consultations at various stages, including concerned government agencies, development partners and community organizations. The program has strong government ownership and solid backing across the development partners in Nepal who are actively supporting the government in the areas of public financial management, decentralization, local governance and community development. The Program is being co-financed by the Government of United Kingdom. The European Union has also agreed in principle to provide additional co-financing by the end of 2012.
During Project Implementation The Program will be implemented in close collaboration with key government agencies, including the Ministries of Finance and Federal Affairs and Local Development, National Vigilance Centre and the Public Procurement Monitoring Office. The Program will be implemented in close coordination with the assistance programs of key development partners such as the World Bank, the United Kingdom's Department for International Development, European Union, Canadian International Development Agency, Embassy of Norway, Demark, and Swiss Development Cooperation, and German Development Cooperation, among others.
Business Opportunities
Consulting Services Three consulting services packages will be procured. Package 1 will procure the consulting services of (1) international consulting firm specializing in public sector management to provide support for the achievement of key policy actions, notably the PETS surveys, the sub-national PEFA assessment, and the development of MC&PM framework. Package 2 will procure the consulting services of (1) international consulting firm for the development of MARS, and Package 3 will procure the consulting services of Individual consultants: (1) international and (1) national; and (1) international consulting firm specializing in e-GP development for the development of e-GP. (Subject to confirmation of additional co-financing from the EU, supplemental support for public procurement capacity building and other PFM reforms will also be procured.) Both packages 2 and 3 will include procurement of computer hardware and development of software. A firm will be recruited for each package using quality- and cost-based selection method with a standard quality-cost ratio of 90:10 due to their highly technical nature. All consultants will be recruited in line with ADB's Guidelines on Use of Consultants (April 2010, as amended from time to time). All procurement of goods and services will follow ADB's Procurement Guidelines (2010, as amended from time to time). At the end of the TA, all equipment procured will be retained by the government. All disbursements will be made in accordance with ADB's TA Disbursement Handbook (May 2010, as amended from time to time).
Procurement The TA will deliver three major outputs: (a) key public financial management (PFM) diagnostic tools; (b) municipal administration and revenue system (MARS); and (c) electronic government procurement (e-GP) system.
Responsible ADB Officer Siddhanta Vikram
Responsible ADB Department South Asia Department
Responsible ADB Division Nepal Resident Mission
Executing Agencies
Ministry of FinanceThe Government of Nepal
Singha Durbar
Kathmandu, Nepal
Timetable
Concept Clearance 28 Oct 2011
Fact Finding 03 Nov 2011 to 12 Nov 2011
MRM -
Approval 26 Sep 2012
Last Review Mission -
Last PDS Update 27 Aug 2015

Grant 0305-NEP

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
26 Sep 2012 27 Dec 2012 26 Aug 2013 31 Oct 2015 - -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 21.00 Cumulative Contract Awards
ADB 21.00 26 Sep 2012 11.00 0.00 52%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 26 Sep 2012 11.00 0.00 52%

Grant 0306-NEP

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
26 Sep 2012 30 Apr 2013 26 Aug 2013 31 Oct 2015 - -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 0.00 Cumulative Contract Awards
ADB 0.00 26 Sep 2012 0.00 1.39 35%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 26 Sep 2012 0.00 0.90 23%

Grant 0368-NEP

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
05 Nov 2013 - - 31 Oct 2015 - -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 2.95 Cumulative Contract Awards
ADB 0.00 05 Nov 2013 0.00 0.00 0%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 2.95 05 Nov 2013 0.00 0.00 0%

TA 8173-NEP

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
26 Sep 2012 28 Dec 2012 28 Dec 2012 31 Oct 2015 27 Apr 2016 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
500,000.00 5,450,000.00 0.00 0.00 0.00 0.00 5,950,000.00 26 Sep 2012 1,734,152.41

Safeguard Documents

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Evaluation Documents

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