Contacts: In Kathmandu: Rajib Upadhya, (9771) 4226792/3 rupadhya@worldbank.org In Washington: Erik Nora, (202) 458 4735 enora@worldbank.org WASHINGTON, November 14, 2006─ The rural poor and vulnerable groups in Nepal stand to benefit from a US$25 million World Bank grant designed to improve community infrastructure and access to income-generating projects. The additional financing for the Poverty Alleviation Fund (PAF) Project, approved today by the World Bank, will support new infrastructure, employment and income-generating opportunities, and enhance the capacity of local governments to provide better services in poor communities. “Against a difficult context of political uncertainty, and conflict, the Poverty Alleviation Fund has proven to be very effective in getting resources to the poorest and most excluded groups,” said Ken Ohashi, World Bank Country Director for Nepal. “More important, it has demonstrated that modest amounts of resources given to community led development initiatives can help many poor families get on a sustainable path out of poverty. This additional financing is critical to ensure continuity of the Fund’s activities at a vital juncture.” The project builds on the original grant of US$15 million, approved by the World Bank on June 1, 2004. The PAF has committed nearly all its available resources, about two years ahead of original schedule. The additional financing will allow the PAF, which currently operates in six of the country’s poorest districts, to scale up project activities to 19 more poor districts. This would allow PAF cover all of the poorest one-third of Nepal’s 75 districts. Following three and a half years of derailed democracy, a new government has been formed by the Seven Party Alliance (SPA) and Parliament has been reinstated. A central challenge for the new government is to establish the credibility of the state as an effective institution, especially in terms of delivering development results. In its current budget, which runs through mid-July 2007, the government has made a set of successful community-based programs the centerpiece of its effort to extend its developmental reach to remote and poorer areas. Among them, PAF is deemed especially important because it has already proven to be effective in targeting the poorest and marginalized communities. “Benefits from the Fund have gone almost exclusively to the poor and excluded groups,” said Geeta Sethi, World Bank Senior Economist and project team leader. “We have witnessed that disadvantaged groups such Dalits, Janajatis, and women are now actively participating in decision-making processes on prioritization of their needs, and implementation of projects.” Sethi said providing additional funding for PAF will not only allow expansion of a successful pilot, but will also signal support for the larger effort by the new government to emphasize inclusive development and sustainable poverty reduction. The grant is from the International Development Association, the World Bank’s concessionary lending arm.
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