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| Kathmandu, Saturday December 21, 2002 Paush 06, 2059. |
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More World Bank aid in the
offing for Nepal
Post Report
KATHMANDU, Dec 20:A crucial meeting of World
Bank (WB) Board of Executive Directors held in Washington DC has decided to upgrade Nepal
into the ‘base case’ scenario from existing ‘low case’ scenario in the
World Bank’s lending category.
The latest upgrade means Nepal now would receive
loan assistance worth US$ 100 million annually or more depending upon the sustained
progress that Nepal makes in accelerating reforms. Prior to the graduation, Nepal was in
low case category, under which Nepal used to get annual loan assistance of upto US$ 50
million.
But, the Board of Directors has clearly warned
that the future resource availability from the bank would largely depend upon the
acceleration of reform process in Nepal. "The board agreed that resource availability
would move in parallel with the Nepal’s performance on reforms," states a press
release issued here today.
The much-awaited graduation into the base case
has come as a result of serious efforts of Nepal in simulating reform process. "The
latest decision is important for Nepal as it sends a positive single among the donor
community over Nepal’s commitment on reforms," said Shankar Sharma,
vice-chairman of the National Planning Commission.
The graduation is based on the progress report
of the Bank’s Country Assistance Strategy (CAS) that was formulated in 1998 and
fulfillment of most of the conditions of CAS ensured the graduation. "Progress in the
implementation of a wide range of reforms over the past 12 months could earn Nepal a
significant increase in the availability of WB resources for the country’s
development," states the release.
Similarly, the meeting also vowed to continue
bank’s support for accelerating financial sector reforms. "Endorsing Nepal’s
efforts at reforming its ailing banking sector, the Board also approved a US$ 16 million
credit on support of a Financial Sector Technical Assistance Project," states the
release. This newly announced assistance is a part of a financing plan totaling US$ 30.1
million and the rest would be financed by Governments of Britain and Nepal.
The meeting also discussed the present political
turmoil of Nepal and expressed satisfaction that despite all the turbulence, a wide range
of reforms has been under implementation. "It is obvious that there are serious
security concerns and political uncertainty, but when one looks past them, one can sees an
impressive records of reforms sustained by the successive governments over the last year
or so," said Ken Ohashi, the WB’s Country Director for Nepal.
The meeting also praised the progress made in
fighting against the worsening poverty through the adaptation of Poverty Reduction
Strategy, which has been incorporated in the Tenth Plan and recent efforts to fight
against corruption. Similarly, the meeting also extolled the effective implementation of
Immediate Action Plan (IAP) and noted that "the IAP is being implemented with a vigor
and seriousness."
The meeting also stated that the a new Country
Assistance Strategy would be formulated next year and until then the government emphasis
on acceleration of decentralisation, among others would guide the bank’s assistance
to Nepal, the release further says.
The meeting also sketched the three main core
areas that the future assistance on financial sector reforms would rest upon. These
include restructuring and re-engineering of the central bank initiating the reforms of the
two largest commercial banks to protect the financial integrity and to prepare the banks
for further steps of restructuring.
Similarly, helping to improve the environment
for financial sector reforms, particularly in the areas of enhancing credit information,
better financial news reporting and better training for the staff in financial
institutions is another core area that the assistance would concentrate on.
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