WB approves US$ 100 million loan for Nepal’s financial sector reforms

Kathmandu, Aug. 8: The World Bank (WB) has approved a $100 million loan to support Nepal in its medium-term reform programme in the financial sector.

The Board of Executive Directors of the bank has decided to extend the fourth Financial Sector Stability Development Policy Credit (DPC4) of about Rs. 11 billion to Nepal to continue with its financial sector reform programme.

The announcement was made while Finance Minister Dr. Yuba Raj Khatiwada is in Washington DC in the USA to participate in the WB’s meeting to finalise the multilateral financial institution’s 5-year (2019-2023) Country Partnership Framework (CPF).

The bank has approved the CPF.

Nepal’s quest to secure a stable path to federalism and an inclusive and prosperous future found strong support when the WB Group’s Board of Executive Directors discussed a new CPF for Nepal for the next five years, said the bank in a statement.

“Welcoming the prospects of stability, the WB, in the CPF, pledges its support to strengthen institutions that are critical to the effective implementation of federalism, as well as innovative pathways to faster, equitable growth and accountable service delivery,” it said.

Nepal’s 2017 elections at the federal, provincial and local levels resulted in a super majority government for the first time in its parliamentary history.

“Nepal’s transition to federalism unlocks opportunities for all citizens to participate in its development,” said Qimiao Fan, the World Bank Country Director for Bangladesh, Bhutan and Nepal.”

“This represents a window of opportunity for the country to further reduce poverty, increase the income of the bottom 40 percent, and pursue its ambitious agenda of inclusive growth and accountable service delivery,” he added.

The CPF notes that the federalism agenda will underpin the WB’s future programs at the strategic, policy and operational levels. It also cautions that transitional vulnerabilities could heighten in the early days of federalism as development roles are adjusted and the new structures take root.

The CPF has given priority to the strengthening of public institutions for economic management, service delivery and public investment; promoting private sector-led jobs and growth; and enhancing inclusion for the poor, vulnerable, and marginalized groups, with greater resilience against climate change, natural disasters, and other exogenous shocks.  

According to the WB, the CPF priorities emerged from extensive consultations with the federal, state and local governments, development partners and key stakeholders including civil society, academia, the private sector, rural community groups and the media.

The framework aligns with the government’s development priorities and Nepal’s goal to graduate to middle income country status by 2030.

Meanwhile, FM Dr. Khatiwada addressed Investors Conference jointly organised by the Embassy of Nepal in the USA and WB’s private-sector wing International Finance Corporation (IFC) the other day.

He urged the investors to invest in Nepal as the government has been putting its efforts to create conducive business climate by amending various laws and policies, ensured the protection of private property, created one-spot services to the investors through the Office of the Investment Board of Nepal, and implemented competitive tax rates.

“The country has political stability and offers tremendous potential in energy, transportation infrastructure, tourism and other many sectors. The government has given priority to the development of infrastructure such as hotel, airport, cable car, adventure tourism, railways and urban infrastructure,” said. Dr. Khatiwada.

“This partnership strategy with the World Bank supports our goal of giving every Nepali equal access to security, justice, good governance, basic services, and an opportunity to participate in our future prosperity,” he said.

 “The new partnership strategy with the World Bank Group is focused on supporting our transition to federalism, fits squarely within our vision and underpins a Nepali-owned model.”

In a meeting with Vice-President of IFC for Asia and the Pacific Nena Stoiljkovic, he discussed about investment in Upper Trishuli Hydroelectricity Project and other potential areas, and supporting the infrastructure summit that would be organised by the government.

“The WB is ready to extend its financial and technical support to Nepal’s priority areas and mobilize investment in the private sector projects,” said Stoiljkovic.

She expressed commitment for support in infrastructure development in Nepal.

“We will expand our investments — both debt as well as equity — and advisory services for private investment in Nepal,” said Wendy Werner, International Finance Corporation’s country head for Nepal, Bangladesh, and Bhutan.

Published in The Rising Nepal daily on August 9, 2018.