PEFA is basically a framework for strengthening public expenditure system of a country. It pays high priority to transparency and accountability in utilizing and managing public funds. The core objective of PEFA is to enhance expenditure management of the public funds and reduce associated fiduciary risk. The PEFA initiative has developed a robust too for measuring PFM performances and providing sound assessment of the quality of PFM for countries of all income levels. Nepal has assessed PEFA indicators and adopted action plan that serve as the national policy for the overall improvement in PFM system, process and institution. Effective implementation of action plan contributes to improve PFM performances that eventually help to achieve better service delivery and efficiency in public expenditure management.