Nepal's Fiscal Federalism Weak, Province Budgets Lag Behind Federal Budget
Summary
Nepal's fiscal federalism shows a weak share and shrinking proportion of provincial budgets compared to the federal budget, highlighting challenges in revenue sharing, narrow revenue scope, and limited provincial authority.
Key Points
- Nepal's federal budget is Rs 21.24 trillion, while provincial governments combined have a budget of Rs 2.92 trillion, reflecting a weak share of provincial budgets.
- Provincial budgets increased by only 1.8% compared to the federal budget's 8.16% growth, indicating a shrinking provincial share.
- Revenue sharing is skewed in favor of the federal government, with provinces and local levels receiving limited shares and no customs revenue.
- Provincial governments face challenges due to narrow revenue sources, limited authority, and a complex three-tier federalism model, leading to weak fiscal federalism in Nepal.
