Nepal | June 25, 2019

ADB ready to increase annual lending level to Nepal

Himalayan News Service
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Amount in $ million; Source : ADB

Kathmandu, January 21

The country would be able to obtain more resources in the coming years from the Asian Development Bank (ADB), as the multilateral development agency has said that it is ready to increase annual lending level to Nepal by 60 per cent starting from the present level of about $275 million per annum.

However, the country’s current project implementation performance has raised eyebrows, as the government has been utilising only half of the amount of effective loans and grants since the last four years.

ADB has stressed on improvement of the project implementation performance to avail more funding for the country’s development.

“Following the recent reforms of ADB’s financial resource, the bank is ready to increase the annual lending level to Nepal by 60 per cent starting 2017 from the present level. However, this will critically depend on accelerating the implementation of existing projects,” said Hun Kim, director general of ADB’s South Asia Regional Department.

Nepal’s overall performance of its portfolio has been trailing behind the ADB average. Of the net available funding amount of $1.733 billion spread over 33 investment projects, 55 per cent is still to be contracted and 72 per cent is still to be disbursed.

Addressing the opening session of the annual Country Portfolio Review Mission (CPRM) of ADB projects in Kathmandu, the ADB director general urged the government and ADB staff to improve the project implementation performance of the ADB-funded projects to tap the opportunities of increased lending space provided by ADB.

“The greatest challenge is that annual disbursement has persistently trailed behind annual new commitments by almost 50 per cent in the recent years. To date, unutilised amount has reached a whopping $1,255 million, almost equivalent to six per cent of the gross domestic product,” said Hun.

Improvement in performance of key projects of energy, Melamchi Water Supply project and airports projects have been acknowledged as silver lining that emerged in 2015, according to him.

Also speaking in the programme, Finance Secretary Lok Darshan Regmi expressed commitment to solve the problems of project implementation identified during previous portfolio review meeting in a swift manner.

The finance secretary further said that earthquake and scarcity of fuel adversely affected the project implementation scheduled in 2015. “Lost momentum of 2015 can be made up in 2016,” he said.

As the country has started reconstruction activities through National Authority for Reconstruction, the country needs massive resources for the rehabilitation and rebuilding of the structures ravaged in the earthquakes of April and May.

Kenichi Yokoyama, ADB’s country director for Nepal, called these progresses as notable and could be the start of turning point for Nepal’s overall project performance.

“We need to consolidate the progresses made and continue tackling these systemic constraints as well as project-specific problems. With these efforts, we are hopeful that annual disbursement can be substantially increased to reach at par with annual lending in the next few years, although the performance in 2016 will still depend on fuel and material supply conditions,” he said.

Projects awarded

KATHMANDU: The Country Portfolio Review Mission granted awards to recognise and appreciate their very strong performance despite the challenging project implementation environment of 2015 based on the readiness of project, meeting the project completion deadline and disbursement, best procurement management, contract and project management and monitoring. Projects, namely, Community Managed Irrigated Agriculture Sector Project – Additional Financing; Community Irrigation Project; Second Small Towns Water Supply and Sanitation Sector Project; Information, Communication and Technology Development Project (Public Service Commission component) and Tanahu Hydropower Project were awarded for their outstanding performance under various categories. Similarly, Raising Income of Small and Medium Farmers Project won the ‘Best Performance’ in the important thematic area of ‘Gender and Social Inclusion’. ADB has acknowledged contractor CTCE-Kalika Construction J/Vas as the ‘Best Performing Contractor in 2015’ for completing a technically challenging bridge construction over the Koshi River at Chatara under the Emergency Flood Damage Rehabilitation Project in 2015.

A version of this article appears in print on January 22, 2016 of The Himalayan Times.

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