Aiding federalism

The World Bank’s Board of Executive Directors approved a $200 million credit to support Nepal’s framework for fiscal federalism and improved public financial management.

The Fiscal and Public Financial Management Development Policy credit will support implementation of the Intergovernmental Fiscal Arrangement Act, establishment of the National Natural Resources and Fiscal Commission, adoption of the Fiscal Responsibility and Budget Management Bill, strengthening of public financial management systems, improvements in budget execution and reforms to improve revenue collection.

The development policy credit is one of the several components in the World Bank’s overall support on federalism in Nepal. Other support includes policy advice, new investment to improve service delivery and capacity, as well as restructuring of the existing portfolio to align with the new federal structure.

The World Bank also approved a $66 million credit to modernise Phase 2 of the Rani Jamara Kulariya Irrigation Scheme sub-branches, territory canals and water courses so water can reach fields with optimal flows.  It will also help strengthen Water User Associations and provide agriculture production support.  Spread over 14,300 hectares, the project will benefit one of the poorest areas in the southwest Karnali basin in the Tarai, most of them from the Tharu community.