Sudurpashchim Province has ranked first among the seven provinces in the latest performance evaluation conducted by the National Natural Resources and Fiscal Commission (NNRFC).
According to the commission’s report for Fiscal Year 2024/25 (2081/82 BS), Sudurpashchim secured 45.7 points to top the list. Koshi Province ranked second with 44.29 points, followed by Bagamati Province (42.46), Lumbini Province (39.71), Gandaki Province (37.91) and Karnali Province (32.26). Madhes Province stood last with 27.28 points.
The commission said the evaluation was based on 11 indicators. Madhes scored zero in five of those indicators.
Acting Chairperson Juddha Bahadur Gurung said the assessment was carried out in accordance with the commission’s established procedures and benchmarks, based on data provided by the respective provincial governments.
“This evaluation indicates how provinces are performing. Although there has been some improvement compared to the past, much more progress is needed,” Gurung said.
The first indicator considered the status of unsettled audit arrears in Fiscal Year 2023/24. The second assessed whether provinces provided conditional grants to local levels as required by law.
Other indicators included the status of budget expenditure, revenue mobilization, and whether provinces transferred 40 percent of vehicle tax revenue to local consolidated funds on a monthly basis in Fiscal Year 2024/25.
The commission also evaluated whether provinces submitted details of fiscal equalisation grants to local levels by mid-April, sent projected income and expenditure estimates for the upcoming fiscal year to the Ministry of Finance by mid-January, conducted annual budget reviews, updated indicators such as air quality and forest area expansion, and maintained timely updates on online portals.
Based on the evaluation, the commission plans to increase the performance-based component of fiscal equalisation grants for Fiscal Year 2025/26. In the current fiscal year’s budget, four percent of the total fiscal equalisation grant has been set aside for performance-based allocation, with higher-performing provinces and local levels receiving a larger share.
Gurung said the move is expected to increase pressure on provincial governments to improve performance in planning, implementation and evaluation. However, he noted that it is not yet feasible to allocate a large portion of grants solely on the basis of performance.
Earlier, a committee led by federalism expert Khim Lal Bhattarai had recommended to ensure at least 50 percent of grants transferred to local levels on performance basis. Bhattarai said linking grants to performance would encourage lower tiers of government to improve service delivery. He also noted that limited human resources and unclear authority from the federal government have constrained some provinces’ performance.
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