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KATHMANDU, Sept. 17 (Xinhua) -- As Nepal is adopting a federalsystem of government, closer attention to sequencing political,financial and administrative decentralization will be important,the World Bank said here on Sunday in its latest ""Nepal DevelopmentUpdate.""
The World Bank said in a statement that a large proportion offederal spending is expected to be passed on to subnationalgovernments, ultimately increasing public spending from fiscal year2018.
However, the Update cautioned that unresolved issues surroundingthe implementation of the new federal architecture could challengebudget execution, particularly during the upcoming year.
""Nepal's new fiscal federalism system suggests a markedasymmetry between stronger decentralization of spendingresponsibilities and relatively unchanged low decentralization oftax collection powers,"" the statement read.
Takuya Kamata, the World Bank's country manager for Nepal saidthat the subnational governments will play an increasingly criticalrole in Nepal's public expenditures.
""A system of fiscal transfers that is designed for transparencyand predictability and supported by a small set of simple rules,could go a long way in helping meet the development objectives offederal Nepal,"" the statement quoted Kamata as saying.
Meanwhile, in its semi-annual assessment of economicperformance, the Update noted that economic activity in Nepal hasbeen highly impacted by severe floods affecting over a third of thecountry.
""Economic growth is expected to be lower than earlier forecastand is expected to average 4.5 percent over the next two fiscalyears,"" the statement said.
Over 80 percent of land in the southern Terai, the country'sfood basket, was affected in the August floods that killed over 100people and displaced thousands of families. Enditem
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