Feb 26, 2016- The Asian Development Bank (ADB) said it would be willing to expand annual lending to Nepal by 70 percent to $500 million from the current $300 million to support critical investments and reforms.
Visiting ADB President Takehiko Nakao made the plan official. He met with Prime Minister KP Sharma Oli and Finance Minister Bishnu Prasad Paudel on Thursday to discuss Nepal’s economic recovery and social development after the devastating earthquakes in 2015.
During the meetings, Nakao praised Nepal’s enactment of its new Constitution as a major milestone in its political transition process.
“The new constitution marks a new era for Nepal and lays the foundation for lasting peace, stability and more rapid socio-economic progress. I hope the remaining political differences over the new constitution will be amicably resolved soon, paving the way for its timely implementation,” Nakao said. The ADB is ready to provide assistance for Nepal’s transition to the new governance structure and public management systems as envisaged in the constitution.
Meanwhile, the ADB has forecast Nepal’s economy to grow 1.5 percent in the current fiscal year, after 3 percent growth in the previous year, affected by the tragic earthquake in April 2015 and subsequent supply disruptions. ADB has expected growth to pick up to 4.8 percent in the next fiscal year 2016-17.
Under the ADB’s country partnership strategy with Nepal for 2013-17, it has accorded priority to major investments in hydropower generation and transmission, enhancing the capacity of international airports, building new economic corridors to promote regional trade and reforming higher education systems.
The ADB will continue its support for inclusive growth through investments in agricultural diversification and productivity, urban and rural water supply and sanitation and rural roads, it said.
The ADB will work to attract private sector investment and public-private partnerships for large-scale hydropower and transmission projects and high-value agricultural value chains.
Nakao said it was essential to accelerate the pace of investment for reconstruction and other development programmes in order to achieve the economic growth potential of 7-8 percent per annum in the medium term. Nepal’s public capital spending has been low at an average of 3.5 percent of the Gross Domestic Product (GDP) over the last five years compared to the 8-12 percent required to fill the critical infrastructure gap within a decade.
A large portion of the ADB’s currently committed assistance of $1.75 billion—equivalent to 6 percent of the GDP—remains unspent. “The government and the ADB should work together to speed up project implementation, including by promoting timely and proactive decision making by project implementing agencies,” said the ADB in its statement.
The implementation of projects slowed further in 2015 due to the earthquake, aftershocks and supply disruptions in southern border districts. “Now that the situation has normalized, the government needs to step up efforts to make up for the delayed reconstruction, as well as build fundamental capacity for project planning, implementation and monitoring,” Nakao said.
Source: The Kathmandu Post