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Selectivity and Proven Success Underpin New World Bank Group Strategy for Nepal

September 15, 2011

Washington D.C., September 15, 2011 – Nepal’s determination to cement the peace through development and poverty reduction found strong support here today when the World Bank’s Board of Directors discussed the new assistance strategy for Nepal for the next two years.

Welcoming the impressive progress Nepal has made in social development indicators, notwithstanding the challenging political environment, the World Bank Group’s new strategy proposes development programs that are consistent with the Government of Nepal’s Three Year Plan.

“Many of the Millennium Development Goal (MDG) indicators have improved and poverty levels are declining,” observes the Interim Strategy Note (ISN). “Inclusion and representation have received increased policy attention, but capacity building of marginalized communities remains challenging,” it says.
Given the transitional nature of Nepal’s current situation, with a new constitution being drafted and elections to follow, the World Bank Group has prepared an Interim Strategy Note covering fiscal years 2012 and 2013.

“The interim strategy sets out some basic parameters of the World Bank Group program but still retains the flexibility to deal with the birth of a new republic,” notes the ISN.

In Nepal, the World Bank Group includes the International Development Association (IDA), the concessionary lending arm and the International Finance Corporation (IFC), the private sector arm. Two more World Bank Group organizations, the Multilateral Investment Guarantee Agency (MIGA) and the World Bank Institute (WBI), also provide investment insurance and capacity building services respectively.

“IDA’s assistance program will help improve food security, reduce malnutrition, especially among pregnant women, improve the immunization coverage of children and enhance the access to and the quality of education” said Ellen Goldstein, World Bank Country Director for Nepal and Bangladesh. “It will also assist in removing key bottlenecks to higher economic growth and more jobs through investments in roads and bridges, and the energy sector.” she said.

"IFC's program, which is complementary and closely coordinated, aims to create a positive impact on private sector growth and poverty reduction through investments in infrastructure, projects that promote inclusive and clean growth, and advisory interventions that enhance trade and support building a better business environment for private sector," said Thomas Davenport, IFC Director for South Asia.

The strategy reflects considerable continuity, building on programs with successful track records that are adapted to local conditions. It also emphasizes greater selectivity, focusing on areas considered vital to Nepal’s development and complementing programs supported by other development partners.

Supporting the Government of Nepal’s overarching goal to build a peaceful, prosperous and just Nepal, the strategy is organized around three ‘pillars’ that emerged during consultations within the Bank Group and with the Government, donor partners and key stakeholders.  

The first pillar intends to enhance connectivity and productivity for growth. The second focuses on reducing vulnerabilities and improving resilience. The third pillar concentrates on promoting access to better quality services. Governance, accountability, gender equality and social inclusion are themes that run across all three pillars.

Within each of these pillars, the strategy identifies specific areas where the Bank Group can make a difference. For IDA, these include roads, food security and livelihood vulnerability, education, health, urban services, and disaster management. For IFC, these include improving access to finance and investment climate, trade facilitation, lending to Small and Medium Enterprises and trade finance facilities for local banks. IDA and IFC expect to work together on power development, agriculture and climate change.   

Over the next two years Nepal can potentially benefit from an allocation of about US$ 400 million from the International Development Association, subject to performance and economic management. These funds could finance four to five new operations per year. The International Finance Corporation can potentially commit US$ 25-30 million on average annually, depending on the availability of viable investments and improvements in the business climate.

Media Contacts
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Alison Reeves
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In Kathmandu
Rajib Upadhya
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Natalia Cieslik
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