Asian Development Bank, the Manila-based multilateral lender, recently launched its five-year country partnership strategy for Nepal, with focus on development of infrastructure, such as hydroelectric projects, roads and airports, to reduce the cost of production and trade, and attract private investment. The strategy, which will guide ADB’s operations in Nepal from 2020 to 2024, also aspires to provide equitable access to basic services through the federal system of governance and introduce reforms in public financial management of sub-national governments. It also intends to improve Nepal’s resilience to natural hazards, raise the quality of education, provide employment-oriented skills training and commercialise agriculture to raise rural incomes. Rupak D Sharma of The Himalayan Times met ADB’s Country Director for Nepal, Mukhtor Khamudkhanov, to discuss the new five-year strategy, ADB’s operations in Nepal and challenges in project implementation. Excerpts:
ADB recently introduced its Country Partnership Strategy for 2020-24. The latest strategy does not look very different from the previous one, apart from the part on support for sub-national governments. Do you agree?
I don’t agree with that. The current situation in Nepal is very different than in the past, as the country now has a more stable political environment. We can lend support to the government more effectively in this environment. Secondly, the country now has a federal system of government. Our strategy clearly mentions ADB’s operation would focus on adjusting to this new system. That’s why the country partnership strategy has laid down three major objectives. First is to improve infrastructure to support private sector-led growth. ADB used to focus on infrastructure development in the past, but this time we are trying to make sure the infrastructure we build spurs private sector-led growth. Second objective of the strategy is to improve access to devolved services, which is clearly linked to the new federal structure. And third is on environmental sustainability and resilience. This is very critical for Nepal, which is prone to different kinds of natural calamities. So these programmes are different from what we had in the past.
How much is ADB providing annually to the government to meet these objectives?
Overall, Nepal will receive an average of $500 million to $600 million per year in the five-year period. This means ADB will be investing around $2.5 billion to $3 billion in the next five years.
ADB’s investment portfolio in Nepal stood at $2.8 billion as of June 30. Has Nepal been able to use this financial support to generate outcomes envisaged by the ADB?
ADB’s investment portfolio in Nepal stood at over $2.9 billion as of October-end. This year we have committed another $358 million for four projects. Of this money, $195 million will be used to improve Mugling-Pokhara highway section; $50 million will be provided to an important programme on food safety and agriculture commercialisation; another $50 million will be used to improve the livelihoods and increase incomes of farmers; and $63 million will be disbursed as additional financing to manage floods and address pollution issues in Bagmati River. So, ADB actually has a big portfolio in Nepal. In 2018, ADB’s commitment to Nepal stood at a record $592 million. This is more than two times the loan we provided per year from 2013 to 2016, when annual average was $235 million. So, there has been substantial increase in lending to Nepal. ADB can increase lending to Nepal but the government must absorb these funds as well. That’s why it is important to increase disbursement because disbursement is proxy for project implementation. An increase in disbursement shows there is progress in project implementation.
Are you happy with the utilisation of funds?
So far, yes. We have good understanding with the government and we are working together. But we always try to encourage government to further improve disbursement because that is important to complete ongoing projects.
You’ve been in Nepal for more than two years. What do you think of Nepal’s development model?
Read the full interview on The Himalayan Times.