KATHMANDU: Asian Development Bank (ADB) has increased its grant allocation to Nepal to $538 million for 2009-2010, from $258 million during 2007-2008.

The allocation — a blend of concessional loans and grants — was announced by vice-president of Operations, Zhao Xiaoyu, at the end his four-day visit to Nepal today. “This scaling up of ADB’s assistance to Nepal testifies to ADB’s strong commitment to Nepal’s development and poverty reduction efforts,” Zhao said adding that sustaining this level of assistance in the future will largely depend on Nepal’s performance in the areas of macroeconomic management, governance and portfolio management.

During his meetings with Prime Minister Madhav Kumar Nepal and other senior government officials, Zhao stressed the importance of staying the course on economic reforms to reduce poverty, addressing other development challenges and working to achieve sustainable economic growth crucial for ongoing peace and stability.

During his visit, he also participated in the foundation-laying ceremony of the diversion tunnel of Melamchi Water Supply Project that will ease water shortage in Kathmandu Valley. Speaking at the ceremony, Zhao congratulated the government for its commitment to the completion of the project, to institutional reforms required under the project and achieving substantial progress under challenging circumstances.

Zhao also met Deputy PM Bijay Kumar Gachhadar, Finance Minister Surendra Pandey, NRBgovernor Bijaya Nath Bhattarai and the National Planning Commission’s vice-chairman and development partners.