May 4: The Government of Nepal on Wednesday signed a deal to receive loan worth US$ 150 million to strengthen the financial sector of Nepal.
The World Bank in a statement expressed its belief that the ‘Finance for Growth’ Development Policy Credit (DPC) will help in creating financial sector stability, diversify financial solutions, and increase access to financial services in Nepal.
Finance Secretary Madhu Kumar Marasini, on behalf of the Government of Nepal, and the World Bank’s Country Director for the Maldives, Nepal, and Sri Lanka, Faris Hadad-Zervos signed the agreement amid a function on Wednesday.
“Our overarching priorities are guided by the objective of achieving sustainable and inclusive growth as also reflected in the 2022-2026 Financial Sector Development Strategy that addresses emerging vulnerabilities from COVID-19 and climate change risks, and focuses on digital payments, and mainstreaming of financial inclusion. The Finance for Growth DPC contributes to these priorities,” the statement quoted Finance Secretary Madhu Kumar Marasini as saying.
According to the statement, this is the second Finance for Growth operation approved by the World Bank Board of Executive Directors on March 24, 2022.
The operation will support enhanced supervision of the banking sector to address financial stability risks in the context of the COVID-19 pandemic’s impacts, the statement added.
“It will help open up capital, insurance, and disaster risk financing markets, and foster financial product innovations. It will also support initiatives to increase liquidity and inclusion through access to external commercial borrowing, financial digitalization, and financial literacy for women. This will help improve the functioning of the financial sector to support private sector-led growth.”
The operation supports Nepal’s green, resilient, and inclusive development, and also initiates a new climate agenda, supporting climate finance resilience policy measures across different sectors, the statement added.
“Nepal is one of the early movers in endorsing green, resilient, and inclusive development (GRID) as a national strategic development approach,” stated Faris Hadad-Zervos, World Bank’s Country Director for the Maldives, Nepal, and Sri Lanka. “By supporting a set of transformative financial sector reforms, including the introduction of a broad-based climate-resilience agenda across all financial markets, this project will further contribute to the government’s policy priorities of mitigating the pandemic’s adverse impacts while supporting a resilient recovery.”