In Kathmandu: Rajib Upadhya (9771) 4226792/3
In Washington: Erik Nora (202) 4584735
Washington D.C., June 4, 2009 – Nepal’s determination to build a robust peace through development and poverty reduction found strong support here today when the World Bank’s Board of Directors discussed the new country interim assistance strategy for the next two years.
Welcoming the many significant milestones achieved since the signing of the Comprehensive Peace Agreement in November 2006, the Bank’s strategy document supports the promotion of consensus and unity to address key elements of the peace process, including the foundations for state building, growth, and improved basic service delivery for Nepal’s poor.
Nepal is undertaking several difficult transitions at the same time. Despite the very real challenges, these transitions present an opportunity to move to the goal of a “new Nepal” which is stable and peaceful, inclusive of all its citizens, prosperous and accountable to its people, observes the Interim Strategy Note (ISN).
Given the transitional nature of Nepal’s current situation, with a new constitution being drafted and elections expected in 2011, the Bank Group has prepared an Interim Strategy Note covering fiscal years 2010 and 2011.
“Nepalis have shown remarkable resilience throughout their history. Thus, this is a period not only of risk but also enormous opportunity,” says Susan Goldmark, World Bank Country Director for Nepal. “While many of the transitions will not be completed in a two-year period, during this time the country can continue to establish a sound basis for peace and economic development.”
The strategy reflects considerable continuity, emphasizing the areas of strength but suggesting more flexibility to respond to opportunities. It builds on the areas which have shown to be robust and to modalities of implementation tailored to local conditions and what has worked in the past. By adopting a “peace filter”, the strategy also intends to improve sensitivity in Bank financed projects to the root causes of the conflict and social tensions.
Supporting the overarching goal of promoting peace and development, the strategy is organized around three themes that emerged during consultations within the Bank Group and with the Government, donor partners and civil society. These are also consistent with priorities of the Government of Nepal.
The first theme addresses the cluster of challenges facing the state in adapting and constructing the systems, institutions, and capacities needed for the new Nepal. The second focuses on overcoming constraints faced by the productive sector, especially in terms of productivity, connectivity and sustainability. The third theme concentrates on expanding and honing programs and activities that can increase opportunities and well-being, especially for the poor and excluded. Social inclusion runs across all of these themes as one of the foundations for the new Nepal. Within each of these themes, the strategy identifies specific areas where the Bank Group can make a difference.
Over the next two years Nepal can potentially benefit from an allocation of about US$ 782 million from the International Development Association (IDA), the Bank Group’s concessionary lending arm. These funds could finance about four to five new operations per year. The International Finance Corporation (IFC), the Bank’s Group’s private sector arm, can potentially commit US$15-20 million on average annually, depending on the availability of viable investments and improvements in the business climate.
The Board also approved a Project for Agriculture Commercialization and Trade. The project aims to improve the competitiveness of smallholder farmers and agribusiness in selected commodity value chains in 25 districts and is aligned with the third theme of the ISN.
The project is designed to help farmer groups and cooperatives engage in profitable market-oriented production and improve access to markets through technology and information services, critical public infrastructure and linkages to agribusiness. It intends to create and strengthen industry-wide partnerships along the value chain, forging linkages between producers, traders, processors, and other stakeholders. The project will also help reduce existing obstacles to agriculture and food trade, increasing the ability of farmers and agribusiness to respond to sanitary and phyto-sanitary and food-quality standards to meet domestic and international market requirements.
The US$20 million project will be financed with a credit of US$10.7 million and a grant of US$ 9.3 million.