Foreign climate grants to reach local level’s directly; Finance ministry launches digital monitoring platform

KATHMANDU: Nepal has introduced a new legal framework aimed at making climate finance mobilization more transparent, efficient, and results-oriented, enabling foreign climate grants to flow directly to provincial and local governments while introducing a centralized digital monitoring system.

The government has brought the Climate Finance Mobilization Procedure 2082 into implementation after approval by the Ministry of Finance Nepal. The framework is designed to streamline the management of international climate assistance received for mitigation of climate change impacts and adaptation measures.

Officials said the procedure establishes a clear roadmap for selecting, mobilizing, and monitoring foreign climate finance while ensuring funds are channeled through a formal national system.

Formal system to mobilize climate funds

Under the procedure, all funds received from global climate funds will be mobilized through the Finance Ministry’s official financial system. A national project pipeline will be created, and projects will be implemented based on priority ranking.

The guideline identifies three core priority areas for climate finance mobilization:

Addressing climate-induced loss and damage

Adaptation programs in highly vulnerable regions and geographies

Projects contributing to greenhouse gas emission reduction

Project selection will be based on geographic balance, employment generation potential, and number of beneficiaries.

To ensure resources remain focused on actual implementation, the procedure caps administrative and technical assistance expenses at a maximum of 20 percent of the total project cost.

Stronger role for provinces and local governments

In line with Nepal’s federal governance structure, the framework explicitly prioritizes channeling climate finance to lower tiers of government.

For nationally run programs, funds will be transferred as conditional grants to the level of government where implementation is most effective.

If a project falls within the jurisdiction of a single local unit, funds will be sent directly to that local government. If multiple local units are involved, priority will be given to provincial governments for implementation.

Officials say this approach is expected to ensure climate resources reach vulnerable communities directly and improve program targeting in high-risk regions.

The Finance Ministry will prepare a national project priority list, either periodically or when requested by international climate funds. This list will guide how nationally allocated resources are used in mobilizing climate finance.

Once the priority list is finalized, accredited entities or implementing agencies will be allowed to submit concept notes of selected projects directly to relevant climate funds or forward them to the Finance Ministry for approval.

Opening access to private sector and NGOs

The procedure also allows the private sector to access climate finance, provided projects do not create any future financial liability for the Government of Nepal. Selection of private-sector proposals must be conducted through public notice and transparent competition.

Non-governmental organizations will be allowed to mobilize climate finance only through the Social Welfare Council Nepal. They will be required to upload annual progress reports and financial flow details to the ministry’s digital platform.

Additionally, NGOs must conduct at least one public hearing and financial audit each year.

Digital monitoring platform and national focal point

The Finance Ministry has been designated as the national focal point for climate finance mobilization.

To strengthen oversight, the ministry will operate a unified digital platform that records:

Project details

Budget allocations

Development partner information

Progress reports

The ministry will also retain the authority to conduct third-party performance audits of projects whenever necessary.

According to the procedure, climate finance will include funds received from global climate funds, development partners, and contributions from Nepal’s internal resources.

High-level committee structure formed

To implement the framework, the government has formed a 17-member Climate Finance Steering Committee under the coordination of the Finance Secretary.

A separate Technical Committee, led by a Joint Secretary at the Finance Ministry, will evaluate projects and provide recommendations.

Both bodies will be supported by the Climate Finance Unit under the ministry’s International Economic Cooperation Division, which will function as their secretariat.

Officials at the Finance Ministry expressed confidence that the new procedure will strengthen Nepal’s credibility in international climate negotiations and improve its ability to claim and mobilize climate finance more effectively while ensuring that assistance produces measurable results on the ground.