FinMin to request WBG to increase development assistance
Kathmandu, August 4
Nepal is planning to seek more assistance from the World Bank Group (WBG) citing that the country needs to invest huge resources in the infrastructure sector to spur economic growth.
Finance Minister Yubaraj Khatiwada has said that he will conduct special deliberations with theexecutive board at the World Bank headquarters in Washington DCon Monday.
The World Bank has been providing Rs 10 billion as budgetary support every year under concessional loan, which is termed as Development Policy Credit IV. However, availability of concessional financing from the World Bank is low and Nepal has enough space to increase foreign loan as the debt to gross domestic product (GDP) is around 26 per cent.
“The International Development Association of the World Bank Group can increase concessional financing to us,” Khatiwada told The Himalayan Times before leaving for the United States on Friday evening.
“We had requested the World Bank to increase concessional loan and they informed us that it would be better if the finance minister briefed the executive board as Nepal’s proposal will be submitted to the board next week,” the finance minister added.
World Bank started providing budgetary support to the government for the initiatives and tangible reforms in the financial sector under the Financial Sector Reform Programme assisted by the World Bank. The country has also initiated reforms in public finance management.
Along with this, the multilateral development agency has hinted that Nepal could avail additional concessional financing if the country initiated reforms in the energy sector as advised by the World Bank.
World Bank’s concessional financing for low-income countries like Nepal carries 0.5 per cent interest rate and payback period of 40 years, with a few more years of grace period to pay back loan. World Bank’s recommendations for energy sector reform are quite similar to what the government has already initiated like amendment of Electricity Act, establishment of Electricity Regulatory Commission, improvement in the financial health of Nepal Electricity Authority and unbundling of the transmission, generation and distribution system, among others.
Khatiwada has said that it is imperative for the government to invest in infrastructure as the growth in all sectors is almost stagnant due to lack of investment and private sector investment will remain low until the government is able to develop robust infrastructure.
The World Bank at present is preparing the Country Partnership Strategy (CPS) for the next five years in line with Nepal’s federal structure.
Khatiwada further said that he will meet the authorities of Millennium Challenge Corporation, which has pledged $500 million grant to energy and transport sectors, and also with other development partners headquartered in Washington. He will also address the US private sector and non-resident Nepalis during Nepal Day celebration organised by Nepali Embassy in the US.