ADB sanctions $40m loan to Nepal

Kathmandu, Mar. 11

The Asian Development Bank (ADB) has sanctioned a US$40 million concessional loan to Nepal which will be used in expanding access to high‑impact digital services for citizens and businesses.

The Nepal Digital Transformation Project—the first in South Asia to be cofinanced under the ADB–World Bank Full Mutual Reliance Framework (FMRF)— will strengthen the country’s data hosting and cybersecurity infrastructure to enhance government-wide digital security and resilience, said the ADB in a statement on Tuesday.

According to the multilateral donor, the loan will be used in initiatives such as developing an integrated citizen service portal, improving the national social registry, establishing a secure government-wide data exchange platform for safe and efficient information sharing, and digitalizing about 11 high‑impact government services. 

ADB Country Director for Nepal Arnaud Cauchois said that the reforms supported by ADB and the World Bank will make key services easier to access, reduce waiting times and administrative barriers, and enhance transparency in government processes—helping build greater trust between citizens and public institutions.

The project, that aligns with Digital Nepal Framework 2.0, e-Governance Blueprint and 16^th Plan, will be implemented by the Ministry of Communications and Information Technology.

The FMRF is an innovative cofinancing arrangement between ADB and the World Bank designed to streamline project preparation, reduce duplication, and deliver faster and more effective development support.

The World Bank is the lead lender for the Nepal Digital Transformation Project, approving its US$50 million concessional loan in February this year.

  Published in The Rising Nepal daily on 12 March 2026.      

ADB approves $100m loan for Nepal reforms

Kathmandu, Nov. 28

The Asian Development Bank (ADB) has approved a US$100 million policy-based loan to advance public financial management reforms in Nepal.

This support will be used for improved public expenditure and debt management at the national level and enhanced resource planning, financial management, and devolved service delivery at the subnational level, the ADB Headquarters informed in a statement.

“The programme will catalyse reforms which will strengthen fiscal sustainability, improve governance, and empower local governments,” said ADB Country Director for Nepal Arnaud Cauchois.

According to him, by enabling local governments to plan and raise revenues more effectively, it will reduce dependency on central transfers, advance Nepal’s federal governance framework, and build long-term resilience.

The initiative aligns with Nepal’s five-year plan and builds on ADB’s previous policy-based concessional support to reinforce Nepal’s fiscal governance and advance decentralisation reforms.

The programme will strengthen fiscal sustainability and fiscal federalism by increasing fiscal space through expenditure rationalisation, revenue generation, fiscal risk reduction, innovative financing, and improved management and governance of public enterprises.

Key reforms at the national level include operationalising Nepal’s first fiscal risk and strategy report; assessing contingent liabilities of state-owned enterprises; institutionalising annual borrowing plans in line with medium-term debt strategy; implementing management and governance policy, and loan and share investment policy for public enterprises.

It also includes upgrading the Public Enterprises Management Information System for real-time monitoring and oversight; and operationalising the Public Financial Management (PFM) reform strategy and integrated PFM System. These reforms will contribute to improved expenditure planning and management and reduced fiscal risks.  

"To bridge Nepal’s development financing gap, the programme will help establish an Alternative Development Financing Fund to mobilise domestic and international capital—including bonds, equity investments, and remittance pools—for resilient infrastructure development," read the statement.

At the subnational and local levels, reforms include digitising taxpayer registration system for provincial governments, operationalising digitised local revenue administration system, operationalising public asset management system, formulating market-based property valuation criteria, and mapping natural resources with revenue-generating potential.

Additionally, the development of local project banks and medium-term expenditure frameworks that are gender- and climate-responsive, will support coordinated planning and strategic public investment decisions. According to the ADB, these reforms will contribute to increased revenue and improved resource planning and management at the subnational and local levels. 

Published in The Rising Nepal daily on 29 November 2025.

ADB, IDA, SDC to support in disaster risk management

Kathmandu, Nov. 5

The Asian Development Bank (ADB), the World Bank Group’s International Development Association (IDA), and the Swiss Agency for Development and Cooperation (SDC) have signed a three-year Memorandum of Understanding (MoU) reaffirming their shared commitment to support the Government of Nepal in strengthening disaster risk reduction and management and building climate-resilient infrastructure.

“Nepal faces increasing threats from climate-induced hazards such as floods, droughts, landslides, and glacier melt, which continue to cause severe human and economic losses and displace communities,” they said in a joint statement on Wednesday.

Nature-dependent sectors, including hydropower—vital to the country’s economic growth—are particularly vulnerable to these impacts.

“Investing in climate-resilient infrastructure and disaster risk management has never been more critical. These investments will not only strengthen communities and safeguard essential assets but also create jobs and foster long-term economic growth,” said Arnaud Cauchois, ADB Country Director for Nepal. He added that through strengthened coordination and technical cooperation, ADB, IDA, and SDC aim to support Nepal in building resilience to climate impacts and ensuring that investments bring lasting benefits to people across the country.

The partner agencies have expressed their intention to collaborate in supporting the Government of Nepal in developing resilient infrastructure and advancing planned and existing investments, including in the hydropower sector, within the Dudh Koshi River Basin in Koshi Province.

“As one of the world’s most vulnerable countries to climate shocks and natural disasters, building resilience is an imperative for Nepal. By joining forces, the ADB, World Bank, and SDC intend to leverage our collective expertise, resources, and commitment to support Nepal’s sustainable development,” said David Sislen, World Bank Division Director for Maldives, Nepal, and Sri Lanka. 

According to the development agencies involved in the initiative, the partnership aims to strengthen Nepal’s disaster resilience by enhancing multi-hazard risk assessment models, establishing comprehensive early warning systems, advancing climate risk management and financial services for climate-resilient infrastructure, and promoting knowledge sharing and awareness.

It will also emphasise joint analytical work, capacity building, institutional strengthening, and close technical collaboration with the Government of Nepal and local stakeholders.

“Switzerland is strongly committed to fostering resilience and sustainable development in Nepal. Through this partnership, a dedicated Swiss team of experts from academia and the private sector will be mobilised to engage with Nepali counterparts, ADB, and IDA to co-develop innovative solutions for disaster risk reduction and climate-resilient infrastructure,” said Ambassador Arno Wicki, SDC Assistant Director General and Head of the Division for Asia – Americas.

Published in The Rising Nepal daily on 6 November 2025.        

ADB unveils Nepal country partnership strategy

Kathmandu, June 17

The Asian Development Bank (ADB) has unveiled its new Country Partnership Strategy (CPS) for Nepal for 2025–2029.

The strategy launched on Tuesday has set a comprehensive agenda to support the country’s inclusive, resilient, green, and employment-intensive economic growth, the ADB informed in a statement.

According to the ADB, the strategy focuses on three strategic priorities: private sector–led, employment-intensive, green economic transformation; inclusive and quality human capital development and public services; and environmental sustainability and climate resilience.

“As Nepal advances toward graduating from least developed country status, the CPS will support the country’s transition to a more sustainable and inclusive growth model,” said ADB Country Director for Nepal Arnaud Cauchois.

He maintained that this model prioritises productivity gains and job creation through domestic private investment and foreign direct investment, improved access to quality infrastructure, skills development, deeper integration with regional and global value chains and exports, while also strengthening resilience to disasters and climate change.

"The CPS is aligned with Nepal’s 16^th periodic plan, which seeks to promote good governance, social justice, and shared prosperity, and the government’s Green, Resilient, and Inclusive Development (GRID) approach," read the statement.

The strategy incorporates cross-cutting themes such as digital development, good governance, and capacity building for federalism, and empowerment of women and disadvantaged and vulnerable groups to ensure that development benefits reach all segments of society.

The ADB said that it’s investments will be delivered through investment projects, policy-lending, and sector development programmes that combine policy reforms, institutional strengthening and investments.

The CPS was prepared through a joint strategic approach with the World Bank Group country partnership framework which creates opportunities for continuous deep collaborations between the two organisations.

The ADB and the World Bank Group together account for around 70 per cent of Nepal’s development financing, according to the multilateral donor.

"A low-risk Group A developing member, Nepal will be eligible to access concessional ordinary capital resources (COL) and ADB expects to mobilize about US$2.3 billion (COL) between 2025 and 2029 and selective grants from the Asian Development Fund 14 which are allocated on project basis for specific thematic priorities," informed the ADB.

Commitment of these funds is guided by government priorities, project readiness, and the country's performance. ADB will also support the mobilisation of additional resources through cofinancing, innovative financing solutions, exploring mobilization of funds from green bonds and the issuance of thematic and local currency bonds (such as Nepali rupee-linked bonds) to international investors.

Published in The Rising Nepal daily on 18 June 2025. 

ADB recommends to develop Sudurpaschim's tourism

Kathmandu, Jun. 4

The Asian Development Bank (ADB) on Wednesday presented recommendations for developing Sudurpashchim into a sustainable and inclusive tourism destination.  

The recommendations were part of the Sudurpashchim Integrated Economic and Tourism Development Study, which was presented at the Tourism Symposium and Pre-Investment and Development Summit, the ADB informed in a statement.

The Summit was held in Dhangadhi and brought together ambassadors, heads of development agencies, federal and provincial government representatives, and private sector leaders to explore investment opportunities in Nepal’s far-western region.  

The Study by ADB was conducted at the request of the Ministry of Culture, Tourism, and Civil Aviation and builds on the 2022 Provincial Tourism Master Plan.

“The province’s natural beauty and cultural heritage are exceptional, yet its tourism potential remains largely untapped,” said ADB Country Director for Nepal Arnaud Cauchois.

According to him, the ADB study shows that targeted investments in connectivity, destination hubs, and workforce capacity can transform Sudurpashchim into a thriving tourism economy.

The key findings of the study emphasised the need for enhanced infrastructure to improve accessibility and promote visitor dispersion, the development of integrated tourism circuits and eco-friendly destination hubs, and cross-sectoral support to strengthen governance, build a skilled tourism workforce, and attract private investment.  

Cauchois reaffirmed ADB’s commitment to continue supporting Nepal’s development. He noted that the event provided a valuable platform to align development strategies, foster public-private partnerships, and promote regional and international collaboration.

 

The event was also attended by Minister of Foreign Affairs Dr. Arzu Rana Deuba, Minister of Forests and Environment Ain Bahadur Shahi Thakuri, Minister of Industry, Commerce and Supplies Damodar Bhandari and Chief Minister of Sudurpashchim Province Kamal Bahadur Shah. 

Published in The Rising Nepal daily on 5 June 2025. 

ADB forecasts 4.4% growth for Nepal in current fiscal year

Kathmandu, Mar. 9

Nepal’s economy is anticipated to grow by 4.4 per cent in the current Fiscal Year 2024/25, up from an estimated growth of 3.9 per cent in FY 2023/24, the Asian Development Bank (ADB) reported in its Asian Development Outlook (ADO) April 2025.

“Nepal’s improved growth forecast is being spurred by a gradual recovery of domestic demand, addressing of reforms in the private sector, and further revitalisation of tourism and related services,” said ADB Country Director for Nepal, Arnaud Cauchois.

According to him, key economic sectors, such as manufacturing and construction, which contracted in 2023/24, will expand this fiscal year owing to stable oil and raw material prices, increased liquidity, and declining interest rates, which have paved the way for increasing credit to all production sectors.

Gross domestic product (GDP) growth is forecasted to reach 5.1 per cent in the next fiscal 2025/26, fueled by government reforms to improve capital budget execution, advancements in tourism and related services, and enhanced agricultural productivity through mechanisation and better irrigation systems, contingent on a favourable monsoon.

Likewise, inflation is expected to moderate this and next year. The inflation forecast is expected to remain within the central bank’s ceiling, assuming a normal harvest and a modest decline in inflation in India, the major source of imports, read the report.

“Nepal’s external sector gained stability in 2023/24 with higher foreign exchange reserves and a prudent monetary stance. Despite higher imports in the latter half of 2024/25, strong remittance inflows are expected to keep the current account surplus at 0.1 per cent of the GDP,” according to the ADB. Next year, a deficit equal to 2.4 per cent of GDP is projected as goods and services imports accelerate.

Likewise, risks to the outlook tilt to the downside.

The multilateral donor said that ongoing tariff rises may cause a global economic downturn, affecting Nepal’s tourism receipts and remittances, and lower foreign aid could negatively impact growth as the country relies on foreign aid to finance development needs. Under-execution of the capital budget would also dent growth prospects.

The growth forecasts were finalised prior to the 2 April announcement of new tariffs by the US administration, so the baseline projections only reflect tariffs that were in place previously, maintained the ADB. However, the report does feature an analysis of how higher tariffs may affect growth in Asia and the Pacific.

Published in The Rising Nepal daily on 10 April 2025.      

ADB estimates 4.9 % economic growth for 2024/25

 Kathmandu, Sept. 25

The Asian Development Bank (ADB) has forecasted that Nepal’s economy would grow by 4.9 per cent in the current Fiscal Year 2024/25, up from an estimated growth of 3.9 per cent in FY 2023/24.

This projection is down by about one-third of the government projection for economic growth. Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel announced in his budget speech for this year that the country would achieve a growth of 6 per cent.

According to the ADB's economic publication Asian Development Outlook, in September 2024, agriculture growth will hinge on a favourable harvest owing to a timely paddy plantation with normal monsoon. Industry growth will be supported by increased electricity generation capacity. And services are expected to grow, supported by higher tourist arrivals that will boost accommodation and food services activities.

With further recovery in domestic demand supported by the cautiously accommodative monetary policy, planned acceleration of capital budget, wholesale and retail trade, transportation and storage and real estate activities are expected to strengthen.

“Gross Domestic Product (GDP) growth will pick up on a gradual recovery of domestic demand, acceleration of infrastructure spending, and further revitalisation of tourism and related services,” ADB Country Director for Nepal Arnaud Cauchois said at a programme organised to launch the ADO in Kathmandu on Wednesday.

Likewise, the multilateral donor also said that the Nepal Rastra Bank’s target of containing inflation within 5.0 per cent in 2024/25 seems attainable. The inflation forecast is expected to remain within the central bank’s ceiling, assuming a normal harvest and a modest decline in inflation in India, the major source of Nepal’s imports.

"External risks will remain relatively well-contained. The external position strengthened last year because of declining trade deficit amid buoyant remittance inflows and increase in tourist arrivals," according to the report.

However, the current account gap will likely turn to a deficit of about 1 per cent of GDP in FY2024/25 from a surplus of 3.9 per cent as the economy recovers and the remittance inflows moderate.

Manbar Khadka, Economist at the ADB Nepal Resident Mission, said that the likely increase in imports and outbound travels will impact the current account balance of the country.

"Risks to the outlook tilt to the downside. Any intensified geopolitical tensions in the Middle East could hurt Nepal’s remittance income and push up oil and food prices. A global economic downturn could affect its tourism receipts. A perennial risk to economic growth in Nepal is high vulnerability to natural disasters and climate shocks," said the report.

According to the ADB, island nations Palau and Samoa are likely to achieve growth of about 8 per cent each by next September. Large economies like China and India will witness growth of 4.2 and 7.5 per cent respectively. In South Asia, India leads the potential growth chart while Bhutan follows with 7 per cent, the Maldives with 5.4 per cent, and Bangladesh with 5.1 per cent. Pakistan and Sri Lanka are forecasted to see an economic growth of 2.8 per cent each.

Likewise, Myanmar is projected as the worst performer with just a 1.7 per cent rise in the economy. 

Published in The Rising Nepal daily on 26 September 2024.

ADB reorients its strategy to climate change and private sector development

 Kathmandu, Sept. 6

The Asian Development Bank (ADB) has approved an ambitious new road map to guide its evolution and scale up its support on key challenges facing Asia and the Pacific, including accelerated efforts to combat climate change and expand private sector development.

ADB’s Strategy 2030 Midterm Review—an update of its corporate strategy—outlines how the bank will transform in a rapidly changing development landscape and respond to challenges that threaten its vision for a prosperous, inclusive, resilient, and sustainable region, a statement issued by the multilateral donor's headquarters in Manila on Friday informed.

“Cascading shocks have derailed years of development progress in Asia and the Pacific. ADB is updating its vision, expanding its financial capacity, and modernising its operational approach to help its members respond to these unprecedented challenges, including the accelerating climate crisis, public health crises, and economic and fiscal vulnerability,” said ADB President Masatsugu Asakawa.

According to him, the new road map sets an unprecedented level of ambition and focus for ADB’s work and will ensure we meet the moment through bold action and transformative impact.

"In line with its mandate to fight poverty and improve lives and livelihoods, ADB will deepen its focus on five of the region’s most pressing development issues: climate action, private sector development, regional cooperation and public goods, digital transformation, and resilience and empowerment," read the statement.

To boost the region’s response to climate change, ADB will target for climate finance to reach 50 per cent of its total annual committed financing volume by 2030. ADB said that it is committed to reaching more than US$100 billion in cumulative climate finance from 2019 to 2030.

To expand private sector development, ADB will target reaching total private sector financing of $13 billion for the year 2030, a tripling of current volumes. This will comprise both its account financing and all direct mobilisation, including a minimum of $4.5 billion in direct private capital mobilisation. In addition, ADB is targeting 40 per cent of sovereign operations contributing meaningfully to private sector development by 2030.

 In September 2023, ADB approved capital management reforms that unlock $100 billion in new funding capacity over the next decade. The reforms expand the bank’s annual new commitments capacity to more than $36 billion—an increase of approximately $10 billion, or about 40 per cent.

Published in The Rising Nepal daily on 7 September 2024.        

ADB approves $166 million for disaster-resilient cities in Nepal

 Kathmandu, Dec. 14

The Asian Development Bank (ADB) has approved a US$166 million financing package to boost the local economy in Nepal by building climate- and disaster-resilient cities that promote sustainable tourism and provide residents with a better quality of life.

The Urban Resilience and Livability Improvement Project aims to contribute to the economic growth, resilience, and livability of Devdaha, Lumbini Sanskritik, Sainamaina, Siddharthanagar, and Tilottama municipalities, as well as Janakpur sub-metropolitan city and Pokhara metropolitan city, the ADB informed in a statement on Thursday.

According to the statement, the ADB will strengthen the municipalities’ resilience to climate and disaster risks through infrastructure development by constructing 150 km of stormwater drainage, rebuilding 100 km of roads, and 45 km of footpaths—responsive to the needs of children, women, the elderly, and people with disabilities. It will establish bicycle lanes to promote clean and healthy mobility.

“This project supports the government’s current National Urban Development Strategy to improve planning and investments in urban corridors and drive sustainable economic growth. It also continues ADB’s long-term engagement with Nepal to strengthen municipal governance and improve basic services delivery,” said ADB Senior Urban Development Specialist Laxmi Sharma.

The project is expected to support the development of tourism to boost the local economy. It will improve historical, cultural, and natural heritage sites in each project municipality and incorporate gender equality and social inclusion-responsive features to increase opportunities for women and disadvantaged groups’ access and socioeconomic benefit, said the ADB.

According to the multilateral donor, it will promote biodiversity conservation and beautify public areas, including greening parks and open spaces, including the Siddharthanagar-Dandha river corridor. 

The project will build the capacity of municipalities and the Department of Urban Development and Building Construction on financial management and revenue generation, urban resilience planning, and ecosystems management. It will also support community internship and skills improvement programs particularly for women and disadvantaged groups. 

ADB’s financing package includes a $6 million grant from the Asian Development Fund, which provides grants to ADB’s poorest and most vulnerable developing member countries.   

Published in The Rising Nepal daily on 15 December 2023. 

ADB to help Nepal, Bhutan to mitigate climate-induced risks

 Kathmandu, Dec. 3

The Asian Development Bank (ADB) has launched a new initiative to help assess and manage climate and disaster risks in the Hindu Kush Himalaya region, a critical water tower supporting the livelihoods of more than a billion of people across Asia.

"Through technical assistance, ADB will undertake deep analysis of multi-hazard risks which include landslides, earthquakes, and floods—including from glacier lake outbursts—and vulnerabilities in Bhutan and Nepal," the ADB informed in a statement on Sunday.

According to the multilateral bank, this will help to strengthen the two governments’ capacities to conduct risk assessments in priority river basins. These assessments will be used to develop early warning systems and risk management options for future infrastructure development.

Home to the largest ice reserves outside of the polar regions, the Hindu Kush Himalayas feed 10 major rivers which sustain the livelihoods of 240 million people in the mountains and more than 1.6 billion people downstream.

The region is warming faster than the global average and if global temperature rises hit 3°C, about 75 per cent of glaciers in Bhutan and Nepal could melt by the end of this century. That would place unprecedented stress on access to water, threaten food and energy security, and result in significant biodiversity loss.

“The roof of the world is melting,” said ADB President Masatsugu Asakawa. “The Hindu Kush Himalayas region is critical to the well-being and economic security of more than a billion people across our region. This initiative will help equip Bhutan and Nepal with essential information and enable them to invest in effective climate adaptation—which is now critical to managing climate risk.”

From 1985 to 2014, economic losses resulting from disasters in the Hindu Kush Himalayas region totaled $45 billion, much higher than those of any other mountain region. Since then, the increasing frequency and intensity of disaster events have pushed up economic losses and the number of people killed or displaced by such events.

 “We must urgently ensure that finance is flowing into climate adaptation projects,” said ADB Principal Economist Declan Magee. “This requires high quality and dynamic assessments of climate and disaster risks that account for multiple hazards that can have impacts across borders.”

 ADB claimed that its assistance will help the governments, private sector, and local communities to understand the risks they face so they can decide on disaster risk reduction and adaptation measures, as well as risk transfer solutions including insurance. "The technical assistance will set the stage for advancing knowledge across the Hindu Kush Himalaya region on climate resilient investment planning, development, and risk management," it said.

As Asia and the Pacific’s climate bank, ADB aims to provide US$100 billion in climate financing from its own resources from 2019 to 2030, including $34 billion for adaptation. In 2022, ADB committed $7.1 billion of climate finance, including $4.3 billion for mitigation and $2.8 billion for adaptation. The bank mobilized an additional $548 million in climate finance from the private sector last year.

Published in The Rising Nepal daily on 4 December 2023. 

ADB, WB for timely project implementation

Kathmandu, Sept. 29

Officer-in-Charge of the Asian Development Bank (ADB) for Nepal Arnaud Heckmann said that timely project implementation is essential for maximising the positive impact of development projects, ensuring efficient resource utilisation, and delivering development results on the ground.

"We will continue to collaborate with implementing agencies to mitigate potential delays and ensure that our projects remain on track,” said Heckmann while speaking at the Joint Tripartite Portfolio Review Meeting organised by the Government of Nepal, ADB, and World Bank in the Capital on Friday.

The meeting was convened to assess the progress of projects supported by ADB and the WB and address key issues to improve portfolio performance, read a statement issued by the stakeholders of the meeting.

Speaking on the occasion, World Bank Country Director for the Maldives, Nepal, and Sri Lanka Faris Hadad-Zervos said that the WB appreciates the government’s efforts towards expediting project implementation and ensuring timely delivery of externally and domestically financed projects on the ground.

 “We are committed to working together to enhance project performance and prioritise tangible development results for the betterment of the Nepali people, particularly those who are marginalised and vulnerable. Nepal has been able to do this in the past, and there is no reason why we cannot optimise performance again,” he said.

The meeting was chaired by Finance Minister, Dr. Prakash Sharan Mahat and Finance Secretary Krishna Hari Pushkar, and attended by secretaries of the Government of Nepal, senior officials, project directors, and staff from ADB and the World Bank.

Participants shared the current progress and engaged in discussions about the constraints and challenges that, if left unaddressed, could potentially impede the overall portfolio performance.

FM Dr. Mahat, expressed appreciation to ADB and the World Bank for their support to Nepal's development over the years.

"Today's meeting was important in terms of identifying collective issues that require improvement and correction. This entails interdepartmental coordination to expedite tasks, ensuring that development projects stay on track to achieve their intended outcomes for the people of Nepal and contribute to poverty reduction and sustainable development. The Ministry of Finance remains committed to timely budget allocation," said the minister.

The Ministry of Finance, relevant ministries, implementing and executing agencies, ADB, and the WB have agreed on specific actions to overcome the challenges and help project implementation and disbursement pick up pace.

Published in The Rising Nepal daily on 30 September 2023. 

ADB projects Nepal's economy to grow by 4.3% in current fiscal

Kathmandu, Sept. 20

Nepal’s economy is expected to grow by 4.3 per cent at market prices in the current Fiscal Year 2023/24, up from an estimated growth of 1.9 per cent in FY 2022/23, says the September 2023 edition of Asian Development Outlook (ADO) published by the Asian Development Bank.

The ADB has also expected that the bank interest rates would go further down and economic activities would be stimulated.

The government has projected the economic growth of 6 per cent for this year.

"With moderation in inflation and comfortable foreign exchange reserves, the Nepal Rastra Bank adjusted its monetary policy stance by lowering the policy rate by 50 basis points to 6.5 per cent, which is expected to help lower commercial interest rates and stimulate economic activities," Jan Hansen, Principal Economist, ADB Nepal Resident Mission, said at a programme organised to launch the report in Nepal.

Services are expected to perform well with expansions coming from real estate, wholesale and retail trade and accommodation and food services. Agriculture growth may, however, decelerate owing to deficient rainfall in June and erratic weather patterns, further aggravated by lumpy skin outbreak in cattle, said the ADB.

The report projects annual average inflation to fall to 6.2 per cent in 2024 from 7.7 per cent in 2023 on subdued oil price increases and a decline in inflation in India, Nepal’s main source of import.

According to the central bank of Nepal, inflation stands at 7.52 per cent in mid-August this year.

“Despite some progress in restoring price and external sector stability, fiscal challenges persist. While the estimated fiscal deficit for FY2023/24 is moderate at 2.4 per cent of the Gross Domestic Product (GDP), much lower than the deficit of 6.1 per cent in FY2022/23, the actual deficit could be substantially higher if the government does not meet its ambitious revenue target for 2023/24,” said Hansen.

According to the ADB, external risks remain relatively well contained. Considering the recent trends and the central bank’s prudent monetary policy stance, the target of maintaining foreign exchange reserves sufficient to sustain at least seven months of imports seems achievable. Amid stable remittances and higher imports, the current account deficit is expected to widen to 1.8 per cent of the GDP as growth revives in FY2023/24.

Downside risks to the economic outlook in 2023/24 may arise from more contractionary economic policy by the authorities to stem price rises given the uncertainties centered around geopolitical tensions, maintained the ADB. This may dampen consumption and domestic production and adversely affect growth.

Manbar S. Khadka, Senior Economics Officer, ADB Nepal Resident Mission, said that increasing revenue is a challenge for the government. However, he expressed hope that the policies announced in the budget of the current FY 2023/24 could help in achieving the higher revenue although the annual target is 'quite ambitious'.

In its Nepal member factsheet, the ADB said that weak governance has long affected the effectiveness of development assistance to Nepal. "The country faces challenges towards ensuring the smooth implementation of federalism. These include limited capacity at subnational levels and slow progress in passing needed legislation and deploying staff, as well as lack of clarity on mandates and responsibilities and coordination among the three tiers of government," read the factsheet.

ADB has committed 494 public sector loans, grants and technical assistance of about US$7.7 billion to Nepal. However, cumulative loan and grant disbursements to Nepal amount to US$ 4.91 billion. 

 Published in The Rising Nepal daily on 21 September 2023. 

ADB approves US$300M loan to improve transport connectivity

Kathmandu, May 19

The Asian Development Bank (ADB) on Wednesday approved a US$300 million (about Rs.  39.5 billion) loan to improve transport connectivity of the Kakarbhitta–Laukahi road in Nepal to international trade routes, particularly to India and Bangladesh.

The project road is along the East-West Highway which forms part of the South Asia Subregional Economic Cooperation corridor (SASEC), the ADB informed in a statement on Wednesday.

“Together with other regional cooperation initiatives under the SASEC framework, better infrastructure, improved connectivity, and safe road networks will boost border trade and logistics and improve the lives of rural communities,” said ADB Transport Specialist for South Asia Sin Wai Chong.  

At least 95 kilometers of road from Kakarbhitta to Laukahi will be upgraded from a two-lane to a four-lane dual roadway. It will incorporate climate- and disaster-resilient design features such as higher thermal resistant pavements and bridges with stringent flood-proofing requirement, informed the multilateral donor.

The project is said to improve road safety through features such as junctions with traffic signals, footpaths with streetlights and tactile paving surface, overhead pedestrian crossings, road crossings with raised platform, and bus stops equipped with lighting system.

It will build the capacity of the Department of Roads in climate- and disaster-resilient strategies, road asset management, road safety, and project management and implementation. According to the ADB, community awareness campaigns on road safety, health and hygiene, and human trafficking will also be conducted. This will be complemented with capacity building programmes for women and disadvantaged groups to improve their mobility and access to services. 

ADB will provide an additional US$750,000 (Rs. 98.8 million) technical assistance grant from its Technical Assistance Special Fund to develop climate change mitigation and adaptation guidelines for road projects, bidding documents, performance indicators, and a user handbook on long-term performance-based maintenance.

Published in Friday Supplement of The Rising Nepal Daily on 20 May 2023.

ADB makes 4.7% growth projection for Nepal

 Kathmandu, Sept. 21

The Asian Development Bank (ADB) published its estimates about the economic growth of Nepal in 2022/23 on Wednesday keeping the numbers at 4.7 per cent.

This is much lower than the government’s growth target of 8 per cent announced through the budget of the current year announced in the end of May.

“Nepal’s economy is estimated to modestly expand by 4.7 per cent (at market prices) in fiscal year 2023, down from an estimated growth of 5.8 per cent in FY2022,” informed the Asian Development Outlook 2022, an economic publication of the ADB.

In the last fiscal year, Nepal’s economy was projected to grow by 5.84 per cent against the initial government estimates of 7 per cent. Failure to mobilse the capital budget and low development spending, growing prices of capital goods in the international market and post-pandemic business revival created liquidity crunch as well as the external sector pressure in the economy in the last fiscal.

That year, growth was low while inflation was high.

The ADB maintained that the Gross Domestic Product (GDP) growth is forecast to moderate largely reflecting the tight monetary policy for the current year, necessary to stem the rise in imports, a marked decline in foreign exchange reserves, and inflationary pressure.

“Downside risks to growth may arise from further stringent measures by the authorities that may be necessary to curb import, which will depress domestic production and consumption, adversely affecting growth,” said ADB Country Director for Nepal, Arnaud Cauchois.

He also stated that a resurgence of COVID-19 infections leading to lockdown measures, intensification of dengue fever straining the fragile health system, disasters triggered by natural hazards, and geopolitical turmoil may further dampen growth prospects.

The update highlights that agriculture growth will likely be boosted owing to a normal monsoon, but the ongoing fertilizer shortages may adversely affect paddy production. Industry is expected to grow on increased generation of hydroelectricity and capacity utilization of industries. The report also notes that services growth will likely moderate owing to a slowdown in real estate, wholesale, and retail trade activities, induced by credit control measures and hike in interest rates.

“But provincial and federal level elections scheduled in November 2022 will stimulate spending supporting GDP growth,” said the multilateral donor.

According to it, the government’s fiscal policy reflected in the budget speech for 2022/23 is somewhat expansionary, focused on strengthening agriculture, industry, infrastructure, and social protection. Monetary policy is contractionary, aimed at curbing high credit growth to contain domestic demand, escalating prices, and rising imports.

The country’s inflation will likely marginally decline to 6.1 per cent in FY 2022/23 from 6.3 per cent in 2021/22, restrained by tight monetary policy, a normal harvest, somewhat subdued oil prices, and a modest inflation decline in India.

Likewise, the ADB said that the current account deficit is estimated to narrow to 8.1 per cent of GDP in FY2023 owing to a moderation in merchandise imports amidst stable remittance inflows. “Out-migration for foreign employment has picked up, exceeding the pre-pandemic level of FY2019. Imports related to COVID-19 will have substantially decreased and falling oil prices will help lower import bill for Nepal,” read the report. 

Published in The Rising Nepal daily on 22 September 2022. 

ADB approves Rs. 9 billion horticulture loan

Kathmandu, Sept. 14

The Asian Development Bank (ADB) has approved US$ 70 million (Rs. 9.03 billion) of financing to improve the livelihood and climate resilience of horticulture farmers in the hilly areas of five provinces in Nepal.

The project is expected to boost the productivity of 30,000 farmer households in Bagmati, Gandaki, Karnali, Province 1, and Sudurpaschchim, mainly through the development of around 10,000 hectares of climate-resilient fruit and nut orchard, said the ADB in a statement on Wednesday.

Under the project, partial grants will be provided to farmer groups and cooperatives to shoulder investment costs, while a credit guarantee fund will be established for farmers who lack collateral to access formal rural finance.

"The beneficiaries, represented by at least 30 per cent women and 20 per cent from disadvantaged groups, will be trained in climate change adaptation practices, including soil management, crop husbandry, and drip irrigation, among others," said the multilateral donor.

It stated that fruit and nut demand in Nepal is increasing due to urbanization, rising national wealth, improved knowledge of nutrition, and tourism, but horticulture productivity has been declining.

A growing portion of cultivated land in hilly areas has been abandoned from farming as people are shifting to other employment and relying on remittances from abroad. The high climate vulnerability in lower hills and mid-mountains also reduces farmers’ livelihood options.

“ADB’s loan will support the government’s push to revive horticulture farming in hilly areas of Nepal, highlighted in its declaration of 2016–2026 as the ‘Fruit Decade’,” said ADB Senior Natural Resources and Agriculture Specialist for South Asia Sunae Kim.

According to her, aside from filling the gap between domestic supply and demand, higher profits expected from commercial fruit and nut farming could also help retain the younger population in the agriculture sector and offer income opportunities for women who are heading households after male outmigration.

The project will also enable farmers to market their produce by preparing a business plan collectively, and promoting cooperatives and marketing associations to aggregate horticulture products and manage their quality. Other interventions include training cooperatives and associations in food safety control systems, financial management, marketing, entrepreneurship and female leadership; supporting the preparation of contracts between cooperatives and buyers; and upgrading value chain infrastructure, such as traceability systems, commodity storage and collection centres, and orchard predator fencing.

ADB’s financing comprises a US$ 60 million concessional loan from ordinary capital resources and a US$ 10 million grant from the Asian Development Fund. The Government of Nepal will contribute about US$ 14.5 million for the project.

The bank also said that it will also administer a US$ 9 million grant from the Global Agriculture and Food Security Programme. The grant will support another 10,000 smallholder farmers, with less than 0.2 hectares and unable to invest in commercial orchard development, in producing irrigated vegetable during the dry season and nutritious food crops during the wet season.

Published in The Rising Nepal daily on 15 September 2022. 

FM wants greater cooperation with ADB

Kathmandu, Feb. 18

Finance Minister Janardan Sharma ‘Prabhakar’ said on Friday that Nepal should enhance cooperation with the Asian Development Bank (ADB) to increase the international market of Nepali goods.

In a virtual discussion with Dr. Wan Farisan bin Wan Sulaiman, Executive Director of the ADB who represents Nepal, Malaysia, Singapore, Thailand and Brunei, FM Sharma suggested for greater cooperation with the ADB to promote Nepal’s foreign trade.

“Nepal is exporting a small amount of goods. The ADB can help us enhance the size of export,” he said, according to a statement issued by his secretariat. 

The Finance Minister said that Nepal should improve its economic and trade indices. “For that, we need to create investment-friendly environment in the country and promote the private sector to establish and expand business and investment,” he stated.

Expressing gratitude to the ADB for its support to control the COVID-19 pandemic and implement reforms in the Nepali economy, he said that Nepal needs more support for the post-pandemic economic revival.

Meanwhile, FM Sharma has urged the newly appointed chairman Ramesh Kumar Hamal to work independently without succumbing to the interest of any power.

Administering the oath of office to the latter, he said, “There are many tasks to do to implement reforms in the capital market. I am hopeful that you will function independently to make them happen,” he said. 

 Published in The Rising Nepal daily on 19 February 2022. 

ADB offers Rs. 19.5 billion loan to buy vaccines

Kathmandu, Aug 11

Government of Nepal has signed a Rs. 19.58 billion concessional loan agreement with the Asian Development Bank (ADB) to purchase vaccines against COVID-19.

Finance Secretary Madhu Kumar Marasini and Nepal Country Director of ADB Arnaud Cauchois signed on the agreement at a programme organised at the Ministry of Finance on Wednesday.

The money will be utilised in procuring 15.9 million doses of COVID-19 vaccines which will benefit about 6.8 million people.

Marasini said that the financial support would be instrumental in ensuring safe and effective vaccine to Nepali people. “It will contribute to save lives of Nepali citizens and revive the economy,” he said, while adding that the vaccination programmes were top priority of the government.

Cauchois expressed confidence that this agreement would be helpful in breaking the deadly cycle of COVID-19 and saving the lives of people, and moving to the economic and social revival. He pledged for the continuation of such support in the future as well.

The government also plans to make the vaccine distribution more effective and enhance community participation in the drive with the new support from the ADB.

Published in The Rising Nepal daily on 12 August 2021. 

Technology backs growth in Asia, the Pacific: ADB

Kathmandu, Feb. 10

The Asian Development Bank (ADB) has said that digital platforms and other technology-based tools are providing new growth opportunities for businesses of all sizes and across all industries in Asia and the Pacific.

This is a trend which could contribute significantly to the region’s sustainable recovery from the coronavirus disease (COVID-19), it said in its ‘Asian economic integration report 2021’ published on Wednesday.

The report features a special theme chapter on the role and potential of digital technologies in contributing to inclusive and sustainable development, how digital technology can spur post-pandemic recovery in the region, and ways to accelerate digital transformation while managing the risks effectively.

“Countries in Asia and the Pacific have leveraged rapid technological progress and digitalisation to recover and reconnect to the global economy during the pandemic. Technology is helping to forge new global linkages, which offer enormous economic opportunities, but also present new risks and challenges,” said ADB Chief Economist Yasuyuki Sawada.

“It is imperative to implement policies and regulations that manage the disruptions and maximise the gains from the burgeoning digital economy, and to lock in these gains through enhanced regional cooperation,” he added.

Business-to-consumer revenues of digital platforms reached $3.8 trillion in 2019 globally, with Asia and the Pacific accounting for about 48% of the total or $1.8 trillion, equivalent to 6% of the region’s gross domestic product.

According to a statement published by the bank, these figures are expected to have significantly increased in 2020 as more business transactions—such as ride hailing, food delivery, and e-commerce—migrate to the digital space amid restrictions imposed to curb the spread of COVID-19.

Accelerated digital transformation can potentially boost global output, trade and commerce, and employment. According to the report, a 20% increase in the size of the global digital sector can increase global output by an average of $4.3 trillion yearly from 2021 to 2025.

Similarly, Asia and the Pacific would reap an economic dividend of more than $1.7 trillion yearly or more than $8.6 trillion over the 5 years to 2025.

There will be about 65 million new jobs created yearly in Asia and the Pacific until 2025 from increased use of digital technologies, with regional trade also expected to increase by $1 trillion yearly over the next 5 years, said the report.

Published in The Rising Nepal daily on 11 February 2021. 

ADB projects economic growth at 1.5%

Kathmandu, Sept. 15

Nepal’s economy is anticipated to grow by 1.5 per cent in fiscal year 2020/21 from the preliminary estimate of 2.3 per cent, according to the latest Asian Development Outlook (ADO) 2020 Update, a publication of the Asian Development Bank (ADB).

Decline in exports, remittances, and tourist income, and the stringent measures to contain the effects of the coronavirus (COVID-19) pandemic, even as the lockdowns have gradually eased, would contribute to further slump in the economy, it said.

After strong growth in the recent years, Nepal is going to have a poor economic growth for the second year in a row due to the COVID-19 pandemic.

“Expected sharp economic downturn in neighboring India, Nepal’s predominant trade partner, will also dent Nepal’s growth prospects,” said ADB Country Director for Nepal Mukhtor Khamudkhanov. “Growth may decline further if the containment period prolongs with periodic lockdowns in major hotspots and consequent restrictions in economic activities through this fiscal year.”

According to the Nepal Macroeconomic Update, which was also released today, agriculture growth may rise as paddy yield is expected to increase on the back of normal monsoon. Nonetheless, delay in timely procurement of fertilizers may dampen potential agriculture growth.

Industrial output will diminish reflecting a contraction in manufacturing and slowdown in construction. Service growth will be significantly lower with sluggish trade and international tourism remains largely closed for the time being despite the reopening of regular international flights on 1 September.

The Update says inflation is projected to moderate to an average of 5.5 per cent in FY2021, down from 6.2 per cent in FY2020, assuming a good harvest, modest oil prices, and subdued non-food prices on weak domestic demand.

The current account deficit is expected to widen from -0.9 per cent of gross domestic product in FY2020 to -1.9 per cent a year later as import growth marginally picks up and remittance inflows decline owing to a slowdown in global demand from this crisis.

Downside risks to the outlook centre on longer-than-anticipated stringent containment measures that may be necessary to contain the COVID-19 spread. 

A delayed economic recovery in advanced economies in 2021 may further dent prospects for employment of Nepali migrant workers, undermining remittance inflows and Nepal’s external position.

With the uncertain return of businesses to pre-COVID-19 normalcy anytime soon, non-performing loans in the banking system may pose some risks to financial stability under a prolonged containment period.

Published in The Rising Nepal daily on 16 September 2020. 

ADB extends loan of $200m for power infrastructure in Nepal

Kathmandu, Aug. 27

The Asian Development Bank (ADB) has agreed to provide concessional loan equivalent to US$ 200 million (about Rs. 23.88 billion) to Nepal for the implementation of South Asia Sub-regional Economic Cooperation (SASEC) Power Transmission and Distribution System Strengthening Project.  

Similarly, Norway agreed to provide a grant co-financing equivalent to US$ 35 million (about Rs. 4.18 billion) to be administered by the ADB.

Finance Secretary Sishir Kumar Dhungana and ADB Country Director Mukhtor Khamudkhanov signed the loan and grant agreement on Thursday at the Ministry of Finance, Singha Durbar.

Likewise, project agreement was signed by Managing Director of Nepal Electricity (NEA) Authority Kul Man Ghising and ADB Country Director Khamudkhanov at the MoF.

Dhungana said that ADB was a major development partner supporting Nepal’s energy sector.

“The project connects to SASEC framework by upgrading substations to enable full-fledged operation of the transmission line at 400 kilovolts, and to facilitate cross-border power exchange with India. The project will also support State 2, where the quality of electricity supply is poor and about 20% of households are still out of access to the national grid,” he further said.

Khamudkhanov said that electricity supplies were expected to increase rapidly during the next several years. Given this, electricity network enhancement has been a priority.

This loan is concessional having a 32-year term, including a grace period of 8 years, an interest rate of 1.0 per cent per year during the grace period and 1.5 per cent per year thereafter.

The grant will be utilised for financing expenditures related to power transmission capacity enhancement and improvement of distribution network and capacity of energy-based enterprises development in Provice-2.

The MoF will relend these assistances to NEA through subsidiary loan and grant agreements for implementation of project activities. The project will accomplish the reinforcement and modernisation of the power supply system in Kathmandu in Bagmati State and will begin strengthening of distribution systems outside of the Kathmandu Valley starting with the Bharatpur Metropolitan City area in Bagmati and Pokhara in Gandaki State, suffering from persisting power supply interruptions.

The project will also support State 2, where the quality of electricity supply is poor and about 20% of households are still without access to the national grid. Further, the project will strengthen transmission lines for evacuation of hydropower to the main load centers, while excess power is traded with neighboring countries, said the MoF.

 The project also aligns with SASEC framework by upgrading substations in Khimti, Barhabise, and Lapsiphedi to enable full-fledged operation of the transmission line passing through these substations at 400 kilovolts, and to facilitate cross-border power exchange with India.

Published in The Rising Nepal daily on 28 August 2020.