The way we are

A row has developed between the World Bank and the parliament over the departure of ICCMT, the foreign managers hired under World Bank conditionality to manage the Nepal Bank Ltd, which has both private and state ownership. For the first time in Nepal’s history, a parliamentary committee has taken a serious note of a multilateral donor’s behaviour. The Finance Committee held the World Bank comment as “blatant interference in Nepal’s internal affairs”. It also drew the government’s attention to this “attitude” of WB, cautioning the donor agency against such an “interventionist” disposition. ICCMT refused to continue work for a six-month extended period; instead it sought an 18-month contract. Last week, WB threatened to halt financial assistance if ICCMT was not called back.

ICCMT has already worked for five years in Nepal. The fat management fee it gets comes from a WB loan that Nepal will have to repay. Is Nepal bound to hire foreign management for an indefinite number of years? The WB threat is a reflection of its past practices to which successive governments had resigned themselves without any resistance that was required in view of the country’s priorities and interests. On the Melamchi project, when the new minister of physical planning in the interim government took a stand against the provision of awarding the management contract for distribution of drinking water in the Kathmandu Valley to Severn Trent, a firm with controversial credentials, Asian Development Bank officials (and, strangely, some government leaders, too) went all out in favour of Severn Trent.

The fact that ICCMT left in a huff means that the government is not responsible for this. But WB pressure and threat constitute a highly objectionable behaviour that the government must refuse to accept. It is because of the lack of firmness on the part of Nepali negotiators and leaders in the past to defend the country’s legitimate interests that multilateral donors have become increasingly assertive in their predilections. Logically speaking, any moneylender’s chief concern should be that his principal and interest are repaid. Next in importance comes the question of whether the loan has been properly used for the specified purposes. Beyond that, all conditions tend to be intrusive. One of the long-standing allegations against some high-profile multilateral donors has been that they tend to promote the agendas of the countries with a decisive say in their management. Too many unreasonable conditions attached to loans mean that the freedom of the governments of recipient nations gets so restricted that they cannot take independent decisions in many important and perhaps sensitive domestic matters. The political parties have often parroted consultation and consensus, but they have not realised as yet that taking a common approach to dealing with multilateral donors should be a vital area where unison needs to be speedily evolved.