Khim Lal Devkota has released an ICePP working paper looking at intergovernmental fiscal transfers in Nepal.
To bridge the gap between revenue rights and expenditure needs, Nepal’s Constitution mandates fiscal transfers, and subfederal units receive four grant types: fiscal equalization, conditional, special, and matching grants. In the short time since the implementation of federalism started in 2017, Nepal has done well with the fiscal transfers system; however, the horizontal distribution of fiscal equalization grants has not been as successful, featuring an allocation formula and methodology that many consider unfair and meriting closer study.
This paper examines the current approaches and proposes alternate allocation formulae and methodologies, including recommendations for coordination and cooperation on fiscal transfer issues.
Read the full working paper here.
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