Nepal is strengthening its national and local public financial management and governance systems with support from ADB and other development partners.

The modernization of the country’s administrative systems was initiated by increasing financial resources and leveraging information technology. An online procurement system was developed and rolled out nationwide along with corruption prevention tools. Communities were also encouraged to participate in local governance, which promoted accountability.

These initiatives improved the delivery of public services, contributing to Nepal’s smooth transition to a federal system of government.


Nepal, South Asia - Nepal is a developing country in South Asia facing several challenges.

A bitter civil conflict left local governments without elected representatives for almost two decades.

This weakened Nepal’s institutions and public services.

The Government of Nepal, together with ADB and other development partners ran a local governance reform program in 2008-2017.

Across the country, communities were encouraged to participate in local governance through community forums.

The program increased financial resources for improved public service delivery and accountability.

Purusottam Nepal, Joint Secretary of Ministry of Federal Affairs and General Administration says, “The proper utilization of these funds became a challenge. Focus on allocation efficiency as well as expenditure effectiveness were needed.”

ADB, the UK’s Department for International Development and the European Union, helped strengthen local public financial management systems.

A Municipal Administration and Revenue System (MARS), a comprehensive e-governance system was developed and piloted in Kathmandu metropolitan city.

Ram Sapkota, IT Director of Kathmandu Metropolitan City says, “If we focus on full implementation of MARS, Kathmandu metropolitan city can become a digital city, and then a smart city.”

An online government procurement system, called e-GP, was developed and rolled out nationwide.

This made procurement more transparent and efficient, leading to cost and time savings of 20%.

Manish Bhattarai, IT Director of Public Procurement Monitoring Office says, “With the introduction of e-GP system, collusive practices have been reduced significantly, and episodes of intimidation were almost stamped out.”

Ram Saran Deuja, Secretary General of Federation of Contractors’ Association of Nepal adds, “e-GP has decreased my bid cost. This is paperless, saving the environment. There used to be an intimidation in tender bidding. Now nobody can stop me from bidding. Since the evaluation process is also done through the system, potential collusion between public entities and contractors can be avoided.”

Accounting software was introduced, laying the ground for the digitization of financial records.

More than 1600 public officials received accounting training.

Corruption prevention tools were also introduced.

Gender issues were addressed as community grants helped women engage in local governance.

Sita Thapa, Coordinator of Citizen Awareness Center Banepa Municipality says, “First we received a grant of 1 lakh for chicken farming, then we received 1 lakh for goat farming, another 1 lakh we invested in the community. Our members are using it at 6% interest rate. Some have done vegetable farming, some raising goats.”

Following Nepal’s transition to a federal system of governance in 2015, local institutions have a stronger role to play.

Dr. Baikuntha Aryal, Secretary of National Natural Resource and Fiscal Commission says, “Funds are transferred directly to provincial and local treasury from central treasury. Public Financial Management (PFM) broadly includes planning, expenditure, reporting, accounting and auditing. It is important not only to continue but scale-up PFM interventions.“