The Asian Development Bank has approved a $100 million policy-based loan to support Nepal’s ongoing public financial management reforms, aiming to improve expenditure planning, strengthen debt management, and enhance financial governance at both national and subnational levels. The program seeks to advance Nepal’s fiscal sustainability while empowering local governments to deliver more efficient and accountable public services.
ADB highlights that the initiative will help local governments plan and raise revenues more effectively, thereby reducing reliance on central transfers and reinforcing the country’s federal governance framework. The program aligns with Nepal’s Five-Year Plan and builds on previous ADB support focused on strengthening fiscal governance and decentralization.
At the national level, reforms will deepen fiscal sustainability by increasing fiscal space, improving revenue generation, reducing fiscal risks, and strengthening the management of state-owned enterprises. Key measures include operationalizing Nepal’s first fiscal risk and strategy report, improving oversight of public enterprises, institutionalizing annual borrowing plans based on medium-term debt strategies, and modernizing the Public Enterprises Management Information System. The program will also advance the implementation of the Public Financial Management reform strategy and help integrate PFM systems for better expenditure control and accountability.
To address development financing gaps, the program will support the establishment of an Alternative Development Financing Fund. This mechanism will mobilize domestic and international capital—including bonds, equity, and remittances—to support resilient infrastructure development.
At the provincial and local levels, the loan will help digitize taxpayer registration, operationalize local revenue administration and public asset management systems, and introduce market-based property valuation methods. Mapping natural resources with revenue potential, along with developing gender- and climate-responsive project banks and medium-term expenditure frameworks, will improve coordinated planning and strengthen local fiscal management. These reforms are expected to increase local revenue, enhance service delivery, and build long-term resilience across Nepal’s decentralized governance system.
ADB continues to play a central role in supporting inclusive, resilient, and sustainable development across Asia and the Pacific through strategic partnerships, innovative financing tools, and public sector reforms.
