Among the provinces, Province 1 tops the chart when it comes to spending. The overall expenditure and capital expenditure of the Province 1 government stood at 24.88 percent and 19.27 percent respectively.
Madhes province has the lowest overall expenditure of 10.9 percent and Karnali province is the poorest in terms of spending capital budget at just 9 percent. The federal government has admitted that all three layers lack spending capacity. “On one hand, the budget transferred to the provinces and local levels as part of the fiscal transfer remains stuck in the banks,” states the mid-term review of the budget. “On the other hand, the federal government has been forced to mobilize internal loans to cover the deficit of the budget.” But officials in the province say that it was natural for provinces to struggle to spend resources because they don’t have enough human resources. “During the employment adjustment process, most of the government employees stayed at the center. Even after five years since the provinces were set up, they are still facing a shortage of human resources,” said an official of the Bagmati province. “Around 2600 vacancies have been created for our province but there are only around 1400 employees working.” In recent years, the federal government has been sending many small projects to the provinces and the local government for their implementation. “While projects to be implemented are increasing, human resource requirements have not been addressed. Hence, it is natural that the allocated budget is not spent,” said the official of Bagmati province. With provincial and local governments relying heavily on fiscal transfer from the central government, the report emphasized that they should be able to mobilize more resources from the areas under their jurisdictions. In the fiscal year 2020/21, the provincial government collected just Rs 15.14 billion from their internal resources, which is just 17.69 percent of the total revenue collected by provincial governments including the amount received through revenue sharing. The report has also called for improving spending capacity and cash and fund management capacity. State of Provincial Governments' Expenditure (First Six Months)
| Province | Total Expenditure | Capital Expenditure |
| Province 1 | 24.88% | 19.27% |
| Madhesh Province | 10.90% | 10.24% |
| Bagmati Province | 15.78% | 10.46% |
| Gandaki Province | 16.33% | 13.82% |
| Lumbini Province | 18.44% | 14.75% |
| Karnali Province | 13.04% | 9.08% |
| Sudur Paschim Province | 14.28% | 10.91% |
