Madhesh Province Releases First PEFA Assessment Report

BFIS News
2026 Sep 28 17:40

Madhesh Province Releases First PEFA Assessment Report

Janakpurdham, Sept. 28: The Government of Madhesh Province on Monday released its first Public Expenditure and Financial Accountability (PEFA) Assessment Report, which assesses the province’s public financial management system and identifies priority areas for reform.

The report was released at a programme jointly organized by the Government of Madhesh Province, the Asian Development Bank (ADB) and the Society of Economic Journalists Nepal (SEJON) in Janakpurdham.

Chief Minister of Madhesh Province Krishna Prasad Yadav, Finance Minister Yubraj Bhattarai and ADB Nepal Resident Mission Country Director Arnaud Cauchois were present at the report launch.

PEFA Consultant Prakash Jung Thapa presented the findings of the assessment. Representatives from the government, civil society, academia, media and development partners participated in the programme.

The assessment evaluates the province’s public financial management system against internationally recognized standards. It covers the period from 2021/22 to 2023/24, while the latest budget submitted to the Provincial Assembly at the time of the assessment was the 2024/25 budget.

The province received an overall D+ score at the indicator level. A total of 32 performance indicators and 98 dimensions were assessed. The report states that D was the most frequent score at the dimension level, while D+ was the most frequent score at the indicator level.
The assessment identified strengths in the province’s budget and accounting classification system, which is consistent with international standards. It also noted comprehensive information in annual budget documents, a budget calendar, timely budget approval, clear rules for in-year budget adjustments, accessible taxpayer information, low expenditure arrears, quarterly budget execution reports and annual consolidated financial statements prepared in line with international standards.

The report, however, identified several areas requiring improvement, including low revenue and expenditure outturns, limited public consultation in budget preparation and investment planning, inadequate financial monitoring of extra-budgetary units, limited information on service delivery, weak public investment management, weaknesses in tax-risk management and payroll controls, fragmented procurement monitoring, and delays in the Provincial Assembly’s review of audit reports.
Madhesh Province Chief Minister Krishna Prasad Yadav said the assessment report had presented an objective and evidence-based picture of the current state of public financial management in the province.

“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,” he said.

The Chief Minister added that the assessment had not only highlighted areas of significance but also provided a clear roadmap for implementing its findings. According to him, the report provides a roadmap for institutional strengthening, procedural reforms, capacity enhancement and improved coordination among government agencies.

Madhesh Province Finance Minister Yubraj Bhattarai said the PEFA assessment had presented an objective and fact-based picture of the performance of the province’s public financial management system.

“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,” he said.

Secretary at the Ministry of Finance of the Madhesh Province Government, Pokharel, said the report had clearly identified several critical areas that need improvement in financial management.

“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,” he said.

Cigdem Akin, Director of the ADB's Public Sector Management and Governance Sector office, said the assessment would help improve budget credibility, enhance transparency and accountability, strengthen fiscal discipline, and ensure more effective use of public resources for the benefit of citizens.

"The PEFA assessment provides Madhesh Province with a clear roadmap for strengthening public financial management and improving how public resources are used," said ADB Country Director for Nepal Arnaud Cauchois. "Strong public financial management is essential to delivering better services, strengthening accountability, and ensuring that public spending translates into tangible results for the people of Madhesh Province.”

The report is intended to serve as a baseline for identifying priority areas for reform and developing a prioritized and sequenced public financial management reform programme. The provincial government plans to use the findings to strengthen fiscal discipline, improve budget credibility, enhance service delivery and ensure better value for money in the use of public resources.

The PEFA Secretariat awarded the report “PEFA CHECK” on November 13, 2025, confirming that it met the required PEFA quality assurance standards.

The assessment was led by the Ministry of Finance of Madhesh Province, with support from ADB and coordination with the Fiscal Federalism Coordination Division of the Ministry of Finance, Government of Nepal. USAID also supported the process until January 2025.