The persistent inability of the Karnali provincial government to effectively utilize its allocated development funds has reached a critical juncture, threatening the very foundations of the local governance model. For years, the promise of federalism was centered on the idea that local leaders could better manage resources to address the unique geographical and economic challenges of the province, yet the reality remains far more complicated and disappointing. While the central government continues to provide substantial grants to stimulate growth in this traditionally neglected area, a massive portion of these funds simply sits idle in bank accounts or is returned to the treasury at the end of each fiscal cycle. This recurring failure is not merely a matter of accounting; it represents a profound loss of opportunity for millions of residents who lack access to basic roads, modern healthcare, and reliable educational facilities. The persistent inability to translate policy into action has created a sense of disillusionment that threatens to undermine the legitimacy of the provincial structure itself, as critics increasingly question whether the local administration is equipped to handle the responsibilities of self-governance.
Under the leadership of Chief Minister Yamlal Kandel, the administration has struggled to break the cycle of stagnation that has plagued previous governments. Despite numerous public declarations regarding reform and efficiency, the actual output of the provincial ministries has not only failed to improve but has shown signs of regression. This crisis of execution is particularly alarming because Karnali remains almost entirely dependent on federal transfers, meaning the inability to spend is essentially a rejection of the only lifeline available for its development. The current gap between the government’s stated policy intent and the ground-level results is widening, leaving a trail of uninitiated projects and incomplete infrastructure that stands as a testament to the administrative paralysis gripping the province. As the provincial leadership navigates this fiscal storm, the pressure to reform the bureaucracy and the political decision-making process has never been more intense.
The Fiscal Reality: Stagnation and Frozen Resources
The recent financial data for the most recent fiscal cycle provides a sobering look at the depth of the provincial government’s execution problems. Out of a total budget of 32.99 billion rupees, the government managed to utilize only approximately 62 percent, leaving a massive surplus of unspent capital that could have been used to transform the local economy. The most damaging failure occurred within the capital expenditure category, which is specifically earmarked for development projects like bridge construction, road paving, and hospital upgrades. Out of the 19.98 billion rupees allocated for these critical infrastructure needs, only slightly more than half was actually disbursed. This resulted in more than 8 billion rupees being frozen at the end of the year and subsequently returned to the central treasury, a loss that effectively strips the province of its potential for growth for another year.
This downward trajectory is even more concerning when viewed against the performance of previous years. While the province initially showed some promise of growth as the new system of federalism matured, reaching a peak execution rate of over 68 percent in the 2024/2025 period, it has since entered a state of steady decline. Major initiatives that were meant to be the flagship achievements of the current administration, such as the Karnali Prosperity Project, have largely failed to move past the planning stages. This lack of momentum has created a backlog of projects that are perpetually delayed, causing costs to rise and public trust to plummet. The inability to spend available funds suggests that the problem is not a lack of financial resources, but a fundamental breakdown in the mechanism that converts those resources into tangible public goods.
Political Obstacles: Performance Agreements and Coalition Friction
One of the primary drivers of this execution crisis is the widening disconnect between the office of the Chief Minister and the various cabinet ministries. Chief Minister Kandel attempted to instill a sense of urgency by introducing a 10-point commitment plan and signing formal performance agreements with his ministers, but these efforts have largely been viewed as symbolic rather than substantive. In a coalition environment, the leadership often finds its hands tied when it comes to holding underperforming ministers accountable. Internal political friction between different parties in the provincial government prevents the Chief Minister from taking decisive action against ministries that fail to meet their spending targets. This results in a governance style where directives are issued with great fanfare, but there is no mechanism for enforcement or consequences for failure.
Furthermore, the persistent culture of “Asare Bikas,” which refers to the practice of rushing development work in the final month of the fiscal year to exhaust the budget, continues to undermine the quality of infrastructure. Despite official mandates designed to spread spending more evenly across the twelve months, the current administration saw a staggering 25 percent of its total budget spent in the final 25 days of the year. This desperate rush leads to poorly constructed roads and buildings that often wash away during the first monsoon rains, essentially wasting the public money that was so haphazardly spent. The lack of systematic planning throughout the first ten months of the year ensures that the government is always playing catch-up, prioritizing the quantity of spending over the quality of the results. This cycle of neglect followed by frantic activity has become the standard operating procedure, much to the frustration of the provincial taxpayers.
Bureaucratic Bottlenecks: Fear and Technical Deficits
Beyond the political sphere, the permanent bureaucracy within Karnali is frequently cited as a major hurdle to project implementation. Senior officials within the ministries often exhibit a paralyzing fear of investigation by anti-corruption agencies, leading to a culture of excessive caution where no one is willing to take responsibility for major decisions. This phenomenon of “file-shuffling” ensures that even simple administrative approvals can take months to navigate through the various levels of the provincial government. Civil servants, worried that any mistake could lead to legal scrutiny or career-ending investigations, often choose to delay projects indefinitely rather than risk making a controversial call. This institutional inertia creates an environment where nothing moves forward, regardless of the availability of funds or the urgency of the project.
In addition to the psychological barriers within the civil service, the province faces a chronic shortage of the technical personnel necessary for infrastructure development. There is a glaring lack of qualified engineers, urban planners, and project managers who are willing to work in the remote and often difficult terrain of Karnali. This technical deficit means that even when a ministry has the political will to start a project, it lacks the human resources to design, supervise, and finalize the construction. The administrative processes for long-term, multi-year contracts are also incredibly cumbersome, often taking so long to satisfy that the construction season is over before a single shovel can hit the ground. This misalignment between the legislative calendar and the practical realities of construction in a mountainous region creates a structural barrier that the current administration has yet to effectively address.
Systemic Accountability: Moving Toward Performance-Based Funding
The ongoing economic stagnation in Karnali has provided significant ammunition to critics who argue that the provincial system is an unnecessary and expensive layer of government. Former leaders and independent analysts have warned that if the provincial government cannot prove its worth by effectively managing its budget, the call to dismantle the entire structure will only grow louder. The failure to execute is not just a financial problem; it is a political liability that threatens the survival of the current decentralization model. To address this, there is a growing consensus that the government must transition to a strictly performance-based budgeting system. Under such a model, future funding for ministries would be directly tied to their proven ability to spend their current allocations responsibly and on time, rather than simply receiving a new budget based on historical trends.
The resolution of the budget execution crisis required a fundamental shift in how the provincial leadership approached the concept of accountability. Effective solutions demanded that the government move beyond empty directives and instead focused on streamlining the procurement process and protecting well-meaning bureaucrats from undue legal harassment. Officials identified that the key to future success lay in the early initiation of projects, ensuring that contracts were signed within the first quarter of the fiscal year to avoid the end-of-year rush. By investing in a dedicated pool of technical experts and providing them with the necessary incentives to remain in the province, the administration aimed to build a more resilient and capable civil service. The lessons learned from the failures of the recent fiscal cycles provided a roadmap for a more disciplined approach to development, where the priority shifted from merely exhausting the budget to delivering high-quality, lasting infrastructure for the people of Karnali.
