WB to provide Rs27.8b in credit to Nepal

March 22, 2018

The Kathmandu Post, Mar 22, 2018

The World Bank is providing a credit of $200 million (approximately Rs20.9 billion) to Nepal to strengthen the public financial management, a move aimed at supporting the country’s fledgling federalism.

The credit line, which has been approved by the Washington, DC-based multilateral lending institution’s board of executive directors, will be used to prepare a framework on fiscal federalism and strengthen public financial management. This is the first tranche of the loan amount under the Fiscal and Public Financial Management Development Policy Credit approved by the World Bank.

“Nepal today is at a historic juncture as it transitions from unitary to federal democratic republic. There are high expectations that the new structure will ensure greater equity and accountability,” a press statement issued by the World Bank quotes its country director for Bangladesh, Bhutan and Nepal, Qimiao Fan, as saying. “This operation will help establish a fiscal framework that will ensure that the newly-elected governments can deliver better services to all Nepali citizens.”

The credit extended by the World Bank will help the Nepal government to implement the Intergovernmental Fiscal Management Act, establish the National Natural Resources and Fiscal Commission, draft the Fiscal Responsibility and Budget Management Bill, strengthen public financial management systems, improve budget execution, and introduce reforms in the revenue sector.

The Development Policy Credit is one of the several components that is expected to support the country’s budding federal system of government. Other support measures include policy advice, new credit line to improve service delivery and improve capacity, as well as restructuring of the existing portfolio to align with the new federal structure.

The World Bank, in the meantime, has also approved a credit of $66 million (approximately Rs6.9 billion) to modernise Phase 2 of the Rani Jamara Kulariya Irrigation Scheme. The credit line will be used to modernise sub-branches, tertiary canals and water courses of the irrigation project, says the World Bank statement. It will also be used to strengthen water user associations and improve agricultural production. During the first phase of the modernisation project, which closed in September 2017, intakes and feeder canals were upgraded and agriculture development programme was launched. Spread over a command area of 14,300 hectares, the project will benefit one of the poorest areas in the southwest of the Karnali basin in the Tarai. Nearly half of the people benefitting from the project belong to the indigenous Tharu community, says the World Bank statement.