Opinion | Budget through federalism lens
Summary
Nepal's FY 2026-27 budget highlights significant fiscal centralization, with the federal government retaining most revenue authority while provincial and local governments face declining fiscal transfers, challenging the principles of federalism.
Key Points
- Nepal's FY 2026-27 federal budget totals Rs2.124 trillion, far exceeding the combined budgets of its seven provinces.
- Despite constitutional provisions, fiscal transfers to provincial and local governments as a share of the federal budget have declined from 33.6% in FY 2018-19 to 28.2% in FY 2026-27.
- Local governments face decreased conditional, special, and matching grants, which are critical for delivering constitutionally assigned services.
- The federal government continues to finance local-level projects directly, undermining local autonomy and the constitutional division of powers.
