Kathmandu, September 12:

A high level official at the ministry of finance (MoF) today categorically denied that there was any talk of cutting aid from World Bank at a time wh-en the country is undergoing vigorous reforms. Bhanu Prasad Acharya, finance secretary at the MoF, talking to The Himalayan Times said that there has not been any discussion or possibility of aid cut to Nepal as per the agreement with the World Bank (WB). Acharya, however, said that discussion, at times, is held as to how the reforms can be expedited in the existing environment.

What is clear is that if we could not continue our reforms as per the agreement with the World Bank, there will be difficulties in negotiating aid with donors, said. Talking about Country Assistance Strategy (2004-2007), whi-ch is up for mid-term review later this year, finan-ce secretary said, “The final review of the reform process is still going on.”

World Bank had already agreed with Nepal that it would get aid ranging from $120 – $200 million yearly as per the base case. Under the low case scenario, Nepal would not get more than $50 million on an annual basis.

WB has already reached an accord with Nepal during the first week of August 2005 in Washington DC that it would provide two grants to Nepal totaling $35 million. The first grant of $32 million is being spent on removing constraints to economic growth and poverty reduction under the rural access improvement and decentralisation project while the second grant of $3 million has been agreed to be spent on expediting the comprehensive reform agenda.

While signing the above two grants, Nepal’s WB chief Ken Ohashi had stated that whether the bank can continue to provide strong financial support in the coming months will depend heavily on the demonstration of political leadership in reinvigorating the pace of reforms. “The Bank’s longstanding position has been that as long as reforms continue and development activities can be implemented, there will be a basis to continue financial assistance.

“For Nepal to achieve faster economic growth and poverty reduction, it is absolutely necessary to resolve the conflict and to restore political stability.”