Nepal has made a strong commitment to achieving the Sustainable Development Goals and aspires to graduate from Least Developed Country status and emerge as a middle-income country. To achieve these ambitious goals, the Government of Nepal will need new strategies to improve the government’s efficiency and effectiveness, increase the levels of finance, and strengthen the enabling environment for private sector investment and growth.
In the context of the changing development finance landscape, Nepal is exploring new opportunities and ways to mobilise and manage resources, both domestic and external, as well as public and private, to finance its development plans and aspirations. Against this backdrop, the Ministry of Finance commissioned this development finance assessment (DFA).
The DFA identifies strategies to improve efficiency and effectiveness in utilising existing resources and opportunities for the mobilisation of additional resources. The assessment provides an overview of Nepal’s development finance flows and the institutions and policies that align this finance with national development priorities. It offers recommendations to enhance the alignment of finance flows to national development goals, improving the basis for achieving development results.
The main conclusion of this DFA is that while finance is one constraint to the achievement of national development priorities, so too is the absorptive capacity to utilise the available financing. Even though Nepal has demonstrated a strong capacity to generate domestic revenues, the assessment concluded that the government’s absorptive capacity needs to be increased to mobilise additional resources.
This DFA recommends that parallel actions, entailing both a change in policy and reform of the public management system of Nepal and its policy planning, budgeting and monitoring frameworks, are pursued to meet the financial needs and efficiency improvements required to achieve national development goals.
The Government of Nepal is committed to using an INFF to identify and implement the reforms needed to move towards a strategic, holistic and results-driven approach to financing the country’s development priorities.
