Government Plans Independent Review System for Major Development Projects

Kathmandu — The government plans to establish an independent institutional mechanism to evaluate national pride and transformative development projects, as repeated delays, rising costs and weak implementation continue to undermine Nepal’s major infrastructure programmes.

The proposed mechanism is included in the Third National Public Financial Management Reform Strategy 2083–2087 BS, unveiled by the Ministry of Finance. The strategy seeks to introduce a more objective system for examining whether large projects are being selected properly, implemented efficiently and delivering the economic and social benefits promised at the time of approval.

Under the strategy, the government will prepare clear criteria for identifying national pride and transformative projects within the current fiscal year. Projects are expected to be classified according to their national importance, investment requirements, economic returns, implementation capacity and proposed completion period.

The absence of consistent selection standards has often allowed projects to receive national priority status without adequate preparation, secured financing or realistic construction schedules. The proposed criteria could make it more difficult for poorly prepared schemes to be included in the government’s list of strategically important projects merely on the basis of political influence or administrative preference.

The independent evaluation mechanism will assess actual physical progress, expenditure, cost escalation, implementation delays and project outcomes. It will also study whether delays resulted from weak planning, land acquisition disputes, forest clearance, contractor underperformance, financing problems, design changes or poor coordination among government agencies.

Such an assessment would mark a shift from the existing practice of measuring progress mainly through budget spending and reported construction percentages. Under the proposed approach, evaluators would also examine whether projects are producing measurable public benefits and whether those benefits justify the resources invested.

The National Planning Commission, the Ministry of Finance and the concerned line ministries have been assigned responsibility for developing the required standards, policies and legal arrangements. Their coordination will be crucial because project selection, budget allocation and physical implementation currently fall under different government institutions.

The government expects the new system to improve decisions concerning project approval, financing, implementation and restructuring. Early identification of technical or financial problems could allow authorities to revise project designs, replace underperforming contractors, adjust budgets or discontinue projects that are no longer economically viable.

However, the effectiveness of the proposed mechanism will depend on its institutional independence. If evaluations remain controlled by the same agencies responsible for selecting and implementing projects, the system may struggle to provide impartial findings or hold officials accountable for delays and cost overruns.

The reform plan forms part of a broader effort to strengthen Nepal’s public financial management system. Public financial management covers the mobilisation, allocation, expenditure, accounting, reporting and oversight of state resources. It also determines how effectively public money is converted into infrastructure, services and broader economic outcomes.

The Ministry of Finance said reforms are necessary to improve fiscal discipline, financial governance, transparency and the quality of public service delivery. An effective financial management system is also essential for implementing federalism, achieving national development goals and strengthening public accountability.

Over the past two decades, Nepal has introduced several reforms based on Public Expenditure and Financial Accountability assessments and other domestic and international studies. These include the modernisation of budget preparation, automation of revenue administration, introduction of the Treasury Single Account and development of digital financial information systems.

The government has also established systems for intergovernmental fiscal transfers and public asset management. These reforms have improved the flow and recording of financial information, but technology alone has not fully addressed weaknesses in budget implementation, project management and institutional accountability.

The strategy acknowledges that further improvement is needed in budget credibility, results-based budgeting, fiscal-risk management, public asset management and coordination among the three levels of government. It also identifies weak integration among digital financial systems as a continuing problem.

Seven strategic pillars have been identified under the new reform programme. These cover budget credibility, budget execution and reporting, revenue administration, intergovernmental financial management, debt and fiscal-risk management, asset management and external oversight, as well as transparency and accountability.

Capacity development, information and communication technology, climate-responsive budgeting and gender-responsive financial management have been included as cross-cutting areas. Their inclusion suggests that future budget decisions will increasingly be assessed not only on financial grounds but also on their environmental and social consequences.

The Ministry of Finance has prepared a separate action plan linking each reform activity with an annual schedule, responsible institution, implementation deadline and measurable result. This is intended to reduce the gap between policy announcements and actual execution, a familiar administrative ritual that has consumed impressive quantities of paper while roads and bridges wait patiently.

A results-based monitoring, evaluation and learning system will also be introduced to assess the progress of the reform programme. The system is expected to identify achievements, weaknesses and lessons that can be used to revise policies and management practices.

The broader objective is to make public expenditure more transparent, accountable and results-oriented. Rather than evaluating government performance only by the amount of budget allocated or spent, the strategy proposes measuring improvements in services, infrastructure, economic activity and citizens’ welfare.

The independent evaluation of major projects could therefore become one of the strategy’s most significant reforms. If implemented with credible standards, public disclosure and genuine institutional autonomy, it could help control cost overruns, reduce politically motivated project selection and direct limited public resources towards projects with stronger economic and social returns.

Its success, however, will depend less on the wording of the strategy than on the government’s willingness to act on unfavourable findings. Independent evaluation will have little value if reports are not published, responsible agencies face no consequences and delayed projects continue receiving additional budgets without credible justification.