Transitional Initiatives
While terming the current stage in Nepal as ‘stalled transition,’ World Bank advises to carry forward reforms and development agenda
By SANJAYA DHAKAL
As per its tradition of preparing Interim Strategy Note (ISN) for countries in significant political transition, World Bank country office in Nepal, too, has prepared it advising the leaders to carry forward reform and development agenda with special focus on inclusion to overcome the difficult challenges ahead.
The ISN terms the current phase in Nepal as ‘stalled transition.’ It identified key interventions such as help prepare a post conflict program; continue lending support and make efforts to keep focus on development.
According to the ISN, Nepal currently finds itself in what it calls ‘stalled transition’ in which the political process hits some obstacles and stalls. “Or as Nepal finds itself now, even though the peace process is intact, the reform and development side is moving slowly,” the ISN states. “This, however, is not a sustainable long-term scenario, for fundamental tensions remain unresolved,” it states.
The Bank has prepared ISN for Nepal covering the period between 18 to 24 months “until a new order emerges.” “The basic strategy of ISN is to protect past reform gains and help government prepare for important post conflict programs,” said Ken Ohashi, Country Director, leading the presentation and discussion on ISN in the capital last week.
In its ISN, the Bank also lists two other likely scenarios – steady transition in which country moves steadily along agreed political roadmap and deterioration in which political processes fail resulting in widespread conflict and breakdown in key state functions.
If Nepal attains the steady transition, the Bank would help organize a donor conference to fund major post conflict program (most likely after CA elections) whereas if the situation deteriorates, the Bank plans to continue support for community-based program while possible.
As per the ISN, the Bank will provide $143 million support to Nepal in the fiscal year 2007 with the possibility of providing additional $30-70 million as budget support. In 2008, the Bank plans to provide $210 million with the possibility of additional $30-70 million as budget support.
“Currently, Nepal faces two basic challenges. In short-term, there is the challenge of completing the political process and in the long-term, the challenge is to bring about socio-political and economic transformation, from a feudal/illiberal system to open/liberal system,” said Ohashi.
He said that the long-term challenge would take a long time to overcome completely. “I can give you an example of my country Japan where this process has been going on since 1850 and I doubt it is complete yet,” he said.
Cautioning Nepali leaders to avoid what he called ‘peace trap,’ Ohashi said “sustainable peace is not just about political accommodations.” He said peace trap –where will be great deal of willingness to meet all sorts of special interest demands leading to rollback of reforms – will lead to fiscal weakness, policy incoherence and low growth. Ohashi said this calls for the government to focus on difficult policy decisions to foster development immediately, not after peace.
Ohashi said that in order to deal with uncertainty, it was important for the country to establish the credibility of state, focus on inclusion agenda, and focus on development.
The ISN notes that there are certain invariant points that are likely to define the development agenda and hence help guide the Bank’s strategy formulation. Specifically, it notes, first challenge for government – even including Maoists – will be to establish credibility of state as an institution. Second, the country must sustain focus on development. Third, Nepal’s development effort should be built on community leadership; and fourth, inclusion agenda will be important to resolve underlying tensions.
