||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.