National 6 (Spotlight Weekly)

Financial Backing

Close on the heels of IMF’s inclusion of Nepal in the PRGF, World Bank approves PRSC giving a much-needed support to the embittered nation

By A CORRESPONDENT

At a time when the country is passing through a terrible phase and when the national economy is vulnerable to complete slowdown, the two leading international financial organizations have come out with a package of sorts to help it overcome the current malaise.

A few days after the International Monetary Fund (IMF) agreed to include Nepal in the Poverty Reduction Growth Facility (PRGF), the World Bank as well, decided to provide US$ 70 million after approving the Poverty Reduction Support Credit (PRSC) and the Country Assistance Strategy (CAS).

The IMF has approved, in principle, a loan of US$ 72 million for Nepal’s PRGF. The IMF and World Bank decisions are complimentary to each other.

“Ambitious poverty reduction targets identified by Nepal in a homegrown development plan, found support when the World Bank discussed its new CAS for the country and approved a US$ 70 million PRSC-1 to help it implement its Poverty Reduction Strategy,” states a press release from the Bank.

The decision (of approval) was taken at the meeting of board of directors of the bank in Washington D.C. on November 18.

The two international financial organizations showed confidence in Nepal because of the latter’s impressive reforms measures despite adverse situation. The support by the two organizations is also expected to boost the confidence of investors and donors.

“Despite the instability and uncertainty linked to political conflict and a violent insurgency, important and often innovative reforms have emerged in Nepal, particularly over the past two years,” states the press release from the WB. It lauds the accelerating pace of reforms citing many examples including putting two commercial banks under external management teams; introduction of Medium Term Expenditure Framework (MTEF), handing over of primary health and education facilities to the community, effective Immediate Action Plan (IAP) and highly visible anti-corruption drive.

“The Bank’s Executive Directors are very supportive of Nepal’s Poverty Reduction Strategy and encouraged by progress achieved in the implementation of reforms so far,” says Ken Ohashi, World Bank country director for Nepal. “This does not mean that Nepal’s development partners have overlooked the real risks that exist in a county where conflict has severely undermined the prospects for development and the quality of life of all the country’s citizens. Failure to achieve a negotiated resolution to the conflict, restore democratic institutions based on participation and accountability, and strengthen protection of human rights will pose serious risks to economic development efforts and severely limit the ability to achieve the PRS objectives.”

Quite in the line of the caveat put forth by Ohashi, Nepal’s major donors came out with a joint statement on November 19, emphasizing on the importance of negotiated resolution of the conflict, restoration of democratic processes ad immediate steps to improve the human rights situation. The also emphasized on the imperative of the continued progress in the reforms, including measure against social and political exclusion, corruption, and other much needed governance reforms. The statement was jointly issued by the Canadian, British, French, German, Danish and Norwegian embassies as well as the Department for International Development (DFID), German Technical Cooperation (GTZ), Swiss Development Cooperation (SDC) and the Netherlands Development Organization (SNV).