November 18: The Government of Nepal and the World Bank signed two separate agreements on Wednesday (November 18) to help strengthen urban governance and the financial sector in Nepal in support of the country’s COVID-19 resilience and recovery efforts.
The agreements for the Nepal Urban Governance and Infrastructure Project and the Finance for Growth Development Policy Credit were signed by Finance Secretary Sishir Kumar Dhungana on behalf of the Government of Nepal, and the World Bank Country Director for the Maldives, Nepal, and Sri Lanka, Faris Hadad-Zervos.
“We are thankful to the World Bank for the support in strengthening urban development and improving financial sector stability in Nepal,” stated Sishir Kumar Dhungana, finance secretary of Nepal. “The projects support Nepal’s implementation of federalism and the financial sector reform agenda, while contributing to the government’s recovery efforts from the COVID-19 crisis.”
According to the World Bank, the $150 million (around Rs 18 billion) Nepal Urban Governance and Infrastructure Project will support municipalities located in two strategic urban clusters: Eastern-Terai region (provinces 1 and 2) and Western region (Gandaki Province and Lumbini Province).
Through Nepal’s’ first dedicated Urban Sector support, the project will finance strategic infrastructure in the targeted cities, based on the priorities of the municipalities and their citizens.
The World Bank said in a statement that the project will also support capacity building for the municipalities for improved urban management and with strong focus on citizen engagement, enabling targeted municipalities to better plan, manage and execute service delivery and urban management activities.
The project will finance small scale labor intensive public works, thus supporting economic recovery and creating temporary jobs for at least 20,000 people across the country, including women and other vulnerable groups. The project also includes a contingency emergency response component to allow for reallocation of project funds to support response and recovery in case of a national emergency.
Similarly, recognizing several initiatives and strong commitment of the Government of Nepal in strengthening financial sector stability, diversifying financial solutions and increasing access to financial services, the World Bank offered the $200 million (around Rs 24 billion) Finance for Growth operation as a budgetary support.
It will support enhanced supervision of risks confronting the banking and financial institutions, especially in the context of the pandemic’s impacts. The operation will also help build capital, insurance, venture capital and private equity and disaster risk financing markets through regulatory reforms. This will help open new investment opportunities for market actors and crowd-in private financing, the statement said.
The operation also focuses on expanding access to finance for households, women and firms through regulatory and other reforms that will attract additional inflows of international finance and mobilize digital services, credit infrastructure and literacy programs.
“The World Bank is committed to support the government in implementing its relief, recovery, and resilience plan to meet urgent demand while focusing on long-term goals and opportunities to rebuild stronger and better from the pandemic,” stated Faris Hadad-Zervos, World Bank’s country director for the Maldives, Nepal, and Sri Lanka. “Through the new projects, we look forward to working with the government to strengthen institutions for effective service delivery as part of the federalism implementation process and build a resilient financial sector to boost economic recovery.”