The Government of Nepal has introduced new restrictions on the use of climate change funds, capping administrative expenses at a maximum of 20 percent of the total allocated amount. This move aims to ensure that the majority of funds are directed toward impactful climate action rather than overhead costs.
Under the newly drafted “Climate Fund Mobilisation Work Procedure 2025”, the Ministry of Finance (MoF) has proposed greater involvement of provincial and local governments, as well as the private sector and NGOs, in tackling climate challenges. Sub-national governments will now be rewarded with higher performance evaluation scores based on their work in climate mitigation and adaptation efforts. However, if they wish to access climate funds, they must do so through conditional grants within the federal budgetary system.
The draft guideline, now open for public feedback, emphasizes effective mobilization of international climate aid. It prioritizes key areas such as climate adaptation, damage response, emission reduction, and carbon trading.
Government agencies will be required to align their policies and programs with existing climate laws, international commitments, national adaptation plans, foreign aid policies, and Sustainable Development Goals (SDGs) outlined by the United Nations. This alignment ensures that all climate-related action is strategic, accountable, and in sync with global frameworks.
Though Nepal’s contribution to global emissions is minimal, the country is highly vulnerable to climate-induced disasters. Issues like drying water sources, increasing floods and landslides, melting snowcaps, and changing rainfall patterns are already affecting communities—especially in the Himalayan region.
Acknowledging the urgent need for external financial support, the MoF stated that the guideline is part of a broader strategy to expand access to international climate finance. As internal resources fall short, the government plans to ramp up efforts to attract global funding to deal with the growing climate crisis.
