Himal Press 
KATHMANDU: The Madhesh Province Government has earned a D+ score in its first Public Expenditure and Financial Accountability (PEFA) Assessment.
The report has identified weaknesses in the province government’s budget credibility, public investment management, revenue and expenditure management, and public participation.
The assessment covers the province’s public financial management system from fiscal year 2021/22 to 2023/24. It examined 32 performance indicators and 98 dimensions based on internationally recognized standards. At the dimension level, D was the most frequently assigned score, according to the report.
Under the PEFA system, PFM performance is graded from A (highest/international good practice) down to D (lowest/below basic performance).
The report, prepared under the leadership of the Madhesh Province Ministry of Finance with support from the Asian Development Bank (ADB), identifies some positive aspects like the availability of adequate information in annual budget documents, a budget calendar, timely budget approval and clear rules for in-year budget adjustments as key strengths. Other positive aspects include relatively easy access to taxpayer information, low expenditure arrears, preparation of quarterly budget execution reports and annual consolidated financial statements in line with international standards.
However, the assessment found several areas requiring improvement. It identified low actual revenue and expenditure performance, limited public consultation during budget formulation and public investment planning, inadequate financial oversight of entities outside the budget and limited information on service delivery as major weaknesses.
The report also points to weak public investment management, shortcomings in tax risk management and payroll controls, fragmented monitoring of public procurement, and delays in provincial assembly review of audit reports.
The provincial government has said that it would use the PEFA report as a baseline document to improve public financial management.
Madhesh Chief Minister Krishna Prasad Yadav said the PEFA assessment provides an objective, evidence-based picture of the current state of public financial management in the province.
“The report has clearly identified some sensitive areas where financial management needs to be improved in the coming days,” Yadav said.
He identified improving budget credibility, strengthening public investment management, increasing citizen participation in budget formulation and service delivery design, and improving the effectiveness of revenue and expenditure management as key reform areas.
Similarly, Madhesh Finance Minister Yubaraj Bhattarai said the assessment provides an objective and fact-based picture of the performance of the province’s pubic finance management system. He said the findings provide an opportunity to strengthen budget execution, public procurement, internal controls, financial reporting, and monitoring and oversight mechanisms.
Speaking at the report launch, ADB Director for the Public Sector and Governance Division in Manila, Çiğdem Akın, said the PEFA assessment would help improve budget credibility, transparency and accountability, strengthen fiscal discipline and promote more effective use of public resources for citizens.
ADB Nepal Country Director Arnaud Cauchois said completion of the assessment marked the beginning of a new phase of reforms. “The diagnostic work is complete. The next task is to translate its findings into concrete action to strengthen institutional capacity and improve results for citizens,” Cauchois added.
