World Bank to ramp up poverty fund

Kathmandu, November 7:

In what may be termed as a major fillip to the government’s poverty reduction strategy, the World Bank plans to upscale the poverty alleviation fund (PAF) from the existing $15 million to a whopping $100 million a year.

The fund was set up in 2004 for financing projects aimed at alleviating poverty in seven districts. While the fund now reaches nine districts, the bank is aiming at extending it to about 25 districts by the end of the year.

The crucial decision regarding the rise in PAF and the areas to be covered under it is scheduled for discussion and approval by the World Bank board of executive directors on November 9, according to the bank spokesperson, Rajib Upadhay.

The World Bank set up the fund two years ago after several years of deliberations, having realised the need to support the government to reach out to the poorest of the poor, particularly in rural areas.

The project’s development objective is to improve the livelihoods of the rural poor and the socially excluded in Nepal. The fund, which works with local user groups and communities, takes care of their basic needs like carrying out small infrastructure work, improving sanitation, health and education.

“The success of this project over the last two years has only validated our conviction that it’s possible to carry out successful development work through local communities,” maintains Upadhaya.

The project aims at enhancing the capacity of local governments, particularly Village Development Committees (VDCs) to provide and sustain services for poor and socially excluded groups.

The PAF is managed by an independent board of nine members with only one representative from the government. The members primarily belong to the National Planning Commission (member secretary), Association of District Development Committees of Nepal (president), National Dalit Association (president), National Association of Village Development Committees of Nepal (president), and National Women’s Association (president).

Meanwhile the bank plans to renew its budget support operations for which it is likely to allocate another $ 100 million, annually.

This will help finance schemes announced by the government during the budget. “It is a unique instrument whereby the government can go on spending money on various development projects and get them reimbursed by the bank till the last day of the fiscal year,” points out the bank’s spokesperson.

The World Bank had initiated this ‘budget support operations’ in 2004. But it was discontinued following concerns about misuse of funds in military operations. Following indications from the government,

urging support for its

budgetary activities, the bank plans to restart the scheme again.

Key developments

•World Bank-sponsored Poverty Alleviation Fund (PAF) to go up from $ 15 million to $ 100 million

•The board of executive directors to approve the move on November 9.