Madhesh Province releases first Public Expenditure and Financial Accountability assessment report

JANAKPURDHAM: Madhesh Province Government on Monday released its first Public Expenditure and Financial Accountability assessment report, which evaluates the public financial management system of the province and identifies priority sectors for reform.

The assessment measures the provincial public financial management system against internationally recognised standards, covering the period from fiscal year 2021/22 to 2023/24. The province received an overall D+ score at the indicator level. Out of 32 performance indicators and 98 dimensions assessed, D was the most frequent score at the dimension level, whilst D+ was the most frequent at the indicator level.

Strengths identified include a budget and accounting classification system consistent with international standards. The evaluation also noted comprehensive information in annual budget documents, a budget calendar, timely budget approval, clear rules for in-year adjustments, accessible taxpayer information, low expenditure arrears, and quarterly budget execution reports.

However, several areas requiring improvement were highlighted, such as low revenue and expenditure outturns, limited public consultation in budget preparation and investment planning, inadequate financial monitoring of extra-budgetary units, and delays in the review of audit reports by the Provincial Assembly. Weaknesses in tax-risk management, payroll controls, and public investment management were also noted.

The report was launched at a programme jointly organised by the provincial government, the Asian Development Bank (ADB), and the Society of Economic Journalists – Nepal (SEJON) in Janakpurdham. Chief Minister Krishna Prasad Yadav, Provincial Finance Minister Yubraj Bhattarai, and Country Director of the ADB for Nepal, Arnaud Cauchois, attended the event, where consultant Prakash Jung Thapa presented the findings.

Chief Minister Yadav stated the report presented an objective, evidence-based picture of the current financial management state.

“The report has also clearly identified several critical areas where financial management needs to be improved in the coming days. Improving budget credibility, strengthening public investment management, increasing citizen participation in the budget formulation and service delivery design processes, and enhancing the effectiveness of revenue and expenditure management are among the key areas requiring improvement,” the chief minister said.

Finance Minister Bhattarai noted the assessment provided a fact-based look at the performance of the province.

“The assessment has not only identified the important achievements we have made so far but has also clearly identified areas that require further improvement in the coming days. It has also highlighted important opportunities to further strengthen budget implementation, public procurement processes, the internal control system, financial reporting, and monitoring and oversight mechanisms,” Bhattarai said.

Echoing these sentiments, Finance Secretary Sebantak Pokharel said, “Improving budget credibility, strengthening public investment management, increasing citizen participation in the budget formulation and service delivery design processes, and enhancing the effectiveness of revenue and expenditure management are among the key areas that require improvement.”

Çiğdem Akın, Director of the Public Sector Management and Governance Sector office at the ADB, noted the evaluation would help improve transparency, strengthen fiscal discipline, and ensure more effective use of public resources.

"The PEFA assessment provides Madhesh Province with a clear roadmap for strengthening public financial management and improving how public resources are used," said Arnaud Cauchois, ADB country director for Nepal.

The assessment was led by the provincial Ministry of Finance with support from the ADB and coordination with the federal Ministry of Finance. The US Agency for International Development (USAID) provided support until January 2025. The secretariat awarded the report a quality assurance check on November 13, 2025, and the provincial government plans to use the findings to develop a sequenced reform programme.