KATHMANDU, June 30

The World Bank (WB) has approved two credits totalling $300 million (approximately Rs 30 billion) to rebuild houses in poor, rural areas and provide an injection of cash for the government’s budget to help the country recover from the devastating earthquakes of April and May.

The credits, approved by the WB’s Board of Executive Directors, are part of a package worth up to $500 million pledged last week by the bank during last week’s International Conference on Nepal’s Reconstruction, says a statement issued by the WB today.

Of the $300 million in loans approved by the WB, $200 million will go towards housing reconstruction.

“The housing reconstruction credit is from the International Development Association (IDA), the World Bank’s fund for the poorest countries. It will provide grants to home-owners to rebuild about 55,000 houses for the poor in rural areas,” says the statement, adding, “The credit will be extended on standard IDA terms with a maturity of 38 years and a six-year grace period.”

The $100 million budget support, on the other hand, is an IDA credit to help the government expand relief and recovery efforts while also supporting policy measures to strengthen the country’s financial sector, which has weakened along with the economy.

“With the swift approval of these credits, the World Bank is striving to fulfil its commitment to the people of Nepal to help them in this difficult time by putting in place credible recovery efforts that target support at those most in need,” the statement quotes Annette Dixon, vice president for South Asia Region of the World Bank, as saying. “The impressive pledges at last week’s donor conference show that Nepal’s partners are there when the country needs them and it will now be important to follow through with effective implementation that is transparent and accountable to the people.”

The WB has also announced the creation of a Multi-Donor Trust Fund to enable Nepal’s donors to coordinate their finance for housing reconstruction. Additional support for housing reconstruction will be necessary to help rebuild over 500,000 homes destroyed in the earthquakes.

In addition to the $200 million housing credit and $100 million budget support, up to $200 million will be redirected from existing WB projects in Nepal and invested in reconstruction efforts, says the statement. “Any reallocated money will be replaced with additional funds.”