Nepal, April 1 -- While much public debate focuses on the cost of provincial structures, the cost structure of local governments has received far less attention. Key aspects such as the total fiscal envelope, resource mobilisation and allocation, sectoral priorities and the split between recurrent and capital spending remain underexamined.

Since the advent of federalism, local governments have become major fiscal actors. The 62nd report of the Office of the Auditor General (OAG) shows that in FY2023-24, local governments had total revenue of Rs641.76 billion. Fiscal transfers from federal and provincial governments accounted for the largest share (47.89 percent), followed by revenue sharing (13.31 percent), cash balance (14.73 percent) a...