Nepal CRPFM 2024 (Climate Annex)

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Six elements are fulfilled, including four basic (no. i, ii, iii, and iv) and two additional (no. vii and xii) as explained in the Table CRPFM-1.1.

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The system in place to track climate related expenditure fulfills three basic elements (no. i, ii, and iv) as explained in Table CRPFM-2.1.

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The budget circular provides a methodology to track climate change related expenditure. It contains guidance on how to factor climate change mitigation and adaptation expenditure into budget proposals and refers to the national climate change strategies.

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Legislative scrutiny of the budget does not meet any criteria.

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Legislative scrutiny of audit and evaluation reports fulfills one element: (i) a review of climate-related/executed expenditures and revenues at a level comparable with the approved budget.

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The public investment management regulatory framework applicable to the sampled projects did not include climaterelated provisions.

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Environmental risks, including climate and social risks, are well identified in appraisal of large projects, particularly those funded by donors. However, there are no approved national guidelines requiring evaluation of climate change impacts of new investment projects that applied to the projects sampled for the assessment of this dimension and indicator.

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Project preparation and selection processes incorporate prioritization steps that rely on climate assessment to some extent.

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The EBUs and public corporations produce financial statements for the government on an annual basis. However, these reports do not specifically include information on funding for climate adaptation or mitigation measures.

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In general, there are legal provision relating to asset management, including use, disposal and transfer of assets. The CoA has dedicated codes for non-financial assets. The digitization of assets has been initiated through the PAMS. However, the system does not cover climate change adaptation and mitigation approaches for these assets.

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The government fiscal risk report does not cover climate-related risks.

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The legal and regulatory framework does not specify arrangements for climate-related reporting on liabilities of debt and guarantees.

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There procurement framework is not climate responsive. According to legal and regulatory provisions, public entities can procure goods, works and services through simplified procedures in special circumstances, including for climate-related disasters36 however this does not constitute a climate-responsive procurement framework.

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Simplified procedures exist to expedite procurement in response to climate-induced disasters. However, standard bidding documents do not set out any climate-responsive standards.

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Procurement databases do not contain information about climateresponsiveness. However, they do contain information about emergency procurement in special circumstances, including disasters, some of which could be climate-change related. The PPMO is responsible for monitoring overall procurement. However, it does not monitor climate responsiveness separately, and it is not part of a comprehensive climate framework.

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There is no separate provision for climate-responsive procurement reporting. There is no provision by which to verify whether contract awards and implementation are consistent with climate-responsive specifications and climate-responsive tenders.

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Currently, Nepal does not have any climate-related taxes intended to reduce GHG emissions.

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There are currently no climate-related taxes in place in Nepal.

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The GoN has implemented a comprehensive internal control framework that extends to climate-related expenditure. However, the prescribed internal control framework does not specify any controls for the climate conditionalities of the transactions.

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While climate-related transactions are subject to audit, fraud investigation, and recovery procedures, there is a lack of evidence to substantiate the percentage of transactions covered during audits or whether auditors had access to information on the implementation of climate-related activities by public corporations that received funds from the BCG.

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The legal and regulatory framework clearly defines the competencies and mandates of the PLGs in relation to climate change. The PLGs follow the climate change policy formulated by the central government. For instance, the Local Adaptation Plan of Action (LAPA) is in place to streamline climate change strategies at the local levels. Nonetheless, there is no evaluation mechanism for the implementation of these mandates and competences.

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Climate change-related conditional transfers are associated with objectives and aligned with the NCCP, 2019. The PLGs report fiscal transfers to the central government annually through financial reporting. Although there is a mechanism to track and report on the financial progress of the climate change-related conditional grants, there is no effective mechanism for the respective sectoral ministries to report on the physical and financial progress of these conditional grants.

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There is a system in place to track climate-related expenditures, at least up to the provincial level. This is achieved in a structured way through the Provincial Line Ministry Budget Information System (PLMBIS). However, there is no effective system in place to track climate expenditures at the local level.

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The major performance indicators by output are included in the budget, including climate change-related outputs. The budget documents including MTEF, ADP, semi-annual budget evaluation report, annual budget progress evaluation reports have output and quantity information of programs. These budget documents are submitted to the legislature and publicly disclosed.

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Sectoral performance indicators, targets, and achieved outputs are reported. However, a separate report for climate change aspects is not submitted to the Parliament.

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The OAG has conducted performance and environment audits of selected climate-related programs in the previous three years and published the reports.

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There is no evidence of any evaluation of the contribution of tax policy to climate change.

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The aggregate climate-related outturn was between 85 percent and 115 percent of the approved aggregate expenditures for climate actions of the last three years.

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The variance in climate-related expenditure composition was less than 15 percent in the previous three years.