Strengthening public financial management

The PFM system needs to be reoriented towards fiscal discipline and productive investment.

Nepal’s public financial management (PFM) is currently suffering from what we call institutional isomorphism. We have adopted the forms of modern budgeting without substance. According to the mid-term review report of the Financial Comptroller General Office, in the first half of the fiscal year, the government spent Rs153.64 billion on debt servicing, the amount the government pays for its borrowing. This amount is three times the amount it managed to invest in capital assets, which is Rs50 billion. This 3:1 ratio suggests systemic erosion: The government is not borrowing to build; it is borrowing to pay for inefficiency.