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Nepal is all set to overhaul the transition from a unitary to a federal set up after the successful completion of a historic federal election of all tiers of government. It is challenging and exciting time to build a strong foundation and establish a proper system to maintain transparency and accountability in the democratic society. Transparency and Accountability are the fundamental requirements of good governance. Transparency guarantees public right to know and inspect whether laws and regulations are implemented in an impartial and predictable manner or not.

Although institutionalizing transparency is not so common practice in the world, Nepal should strive to institutionalize transparency in the new form of government. A less developed country like Nepal lacks the institutional capacity to implement cost-benefit policy measures. The Cost and Benefit analysis of policy becomes prohibitively costlier and takes time to implement it. Country like Nepal requires technical and financial support for enabling them to institutionalize transparency. It also involves the formulation of optimal policies and the evidence-based analysis of trade-related policy measures in bringing economic reform in the country.

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Australia has been successful in institutionalizing transparency by establishing Productivity Commission (PC). The PC acts as an Australian Government’s advisory and review body on issues like microeconomic policy and regulation. It is independent and its transparent advice contributes to well-informed policy and decision-making. The Productivity Commission (PC) is considered as the epitome of transparency which has played an important role in facilitating economic reforms.

The National Planning Commission (NPC) of Nepal can operate under similar modal of Australia’s Productivity Commission to institutionalise transparency in the country. As an apex body, it can guide to all level of governments in framing country’s development plans and policies. According to the provision of Intergovernmental Fiscal Management Act, the NPC is planning to reintroduce the Medium-Term Expenditure Framework (MTEF). The MTEF will help the government to identify medium-term expenditure needs and find revenue sources to meet those needs.

The NPC can play a vital role in bringing structural reforms in a number of ways. It should be authorized to conduct an inquiry. It can be done via collecting public opinions through hearings incorporating feedback on draft reports. By exposing the arguments of vested interests of different interest groups, the Government can become fully aware of the likely reactions to policy approaches. Sometimes unexpected response might lead to policy reversals. So, it helps to reduce such response and prevent from policy reversals. The NPC’s report will ultimately assist the Government in designing reform policies which shall be published. The government may refer any matter it considers appropriate and it is not obliged to take NPC advice. Government departments shouldn’t rely only on NPC reports because these departments are also responsible to conduct their own internal evaluations of policies. Transparency should be an integral part of National Planning Commission’s operation.

In the world of digitalization, we also need to develop a system for the availability of real-time information. There are some instances where the discrepancies have been detected in data on production of milk, meat and eggs compiled by two different government bodies. The disparity in Trade data is another serious issue where three different government bodies-the Department of Customs, NRB and the Trade and Export Promotion Centre collects the data from the same source i.e. Department of Customs. These situations question the reliability of statistics produced by the government. Therefore, Central Bureau of Statistics should be responsible to standardise, process and analyse data in order to avoid duplication and discrepancies.


Transparency and Accountability must prevail in the Fiscal federalism. Under Federal Act, the power and fund will be decentralised to the local bodies which are comparatively more than that of a unitary form of government. In order to prevent the misuse of power and fund, different Acts are enacted for the effective and efficient operationalisation of fiscal federalism. Some of the Acts are Local Government Operation Act, Intergovernmental Fiscal Management Act and The National Natural Resource and Fiscal Commission Act. Federal Financial Procedure Act is another law under fiscal federalism which is expected to maintain fiscal discipline by providing true and fair accounting information. There should be a mechanism to check and balance all the activities of local bodies, provincial and central governments. The rule of law must function properly and the punish those who violate it.

The benefits of institutionalising transparency are immense but the processes are rigorous, expensive and time-consuming. Nevertheless, it fosters an evidence-based approach to public policy. It enhances government accountability, facilitates greater collaboration and builds public trust among all tiers of government. It strengthens creditability and reduces the scope for rent-seeking. It is considered as the strong weapon to combat corruption. Nepal stood at 131 in the Corruption Perception Index 2016 survey published by Transparency International. Nepal performance in the corruption perception index of last 10 years has been disappointing. Corruption continues to threaten the economic progress if we don’t create a culture of accountability. It is very important to shield the corruption watchdog institutions so that they can bring corruption to light and the corrupt to justice.


At present, the country is in the process of establishing a proper system to practice federalism. Side by side, there is also dire need of developing a proper mechanism to check and balance on the established system. Nepal’s economic performance can be benefited greatly due to the establishment of high-quality transparent institutions like Productivity Commission. The databank government body, Central Bureau Statistics, must play a vital role in providing updated real-time time in the respective websites of government. To conclude country is in the urgent need of institutionalizing a culture of transparency and accountability.