IGFC session flags tax disputes, budget execution failures and poor coordination across three tiers

KATHMANDU: The 11th meeting of the Intergovernmental Fiscal Council (IGFC), held under the Intergovernmental Fiscal Management Act, 2074, concluded at the Ministry of Finance today with federal, provincial, and local representatives raising long-pending issues regarding budget execution, tax administration, and fiscal coordination across the three tiers of government.

The meeting was chaired by Finance Minister Rameshwar Khanal, who also serves as the council’s coordinator. Senior officials, including ministers from all seven provinces, experts, secretaries from key ministries, and representatives of municipalities and rural municipalities, were present.

Meeting Focuses on Core Challenges in Fiscal Federalism

At the outset, Joint Secretary Sevenatak Pokharel, head of the Financial Federal Coordination Division at the Ministry of Finance, welcomed participants and outlined the meeting’s priority agenda. He highlighted recurring challenges in fiscal federalism, including:

Pokharel urged all tiers of government to engage in practical dialogue and produce concrete conclusions to improve service delivery and ensure that financial federalism is felt “directly by citizens.”

Provinces Present Joint Declaration to Federal Government

Finance Ministers from all seven provinces presented a joint declaration aimed at easing the implementation of fiscal federalism. The document, drafted collectively at the provincial level, was formally handed over to the federal finance minister.

Provincial leaders, including the Chief Minister and Finance Minister of Madhesh Province, emphasized the need for clearer legal provisions, timely budget transfers, and improved coordination with the federal government to resolve long-standing administrative and financial bottlenecks.

Local Governments Demand Correction of Legal Conflicts

Representatives from the Municipal Association of Nepal (MuAN), the National Association of Rural Municipalities (NARMIN), and various local units raised concerns over:

The Governor of Nepal Rastra Bank, secretaries from multiple ministries, and expert members of the council provided responses to the issues raised. They committed to contributing from their respective institutions to strengthen fiscal federalism and address technical complications regarding federal-provincial-local coordination.

Finance Minister Announces Local-Level Tax Service Expansion

Concluding the meeting, Finance Minister Khanal announced that several tax-related services previously available only through tax service offices will now be made accessible through local governments, allowing taxpayers to receive services within their own municipalities. He said the shift would help enhance the revenue-raising capacity of local governments.

He reiterated that provinces and local governments are independent and accountable in budget formulation and implementation, adding that the federal government remains committed to advancing fiscal federalism.

The meeting closed with a shared understanding that better coordination, timely legal reforms, and improved administrative systems are essential to stabilizing Nepal’s federal fiscal structure and ensuring smoother delivery of public services nationwide.