October 1: The Government of Nepal and the World Bank have signed two agreements totaling $200 million (equivalent to approximately Rs 23.5 billion) as budgetary support to underpin a program of critical reforms in the financial and energy sectors in Nepal. According to the World Bank, the agreements were signed during the World Bank’s annual meeting in Bali Nusa Dua, Indonesia.
Overseeing the signing ceremony, Finance Minister Yuba Raj Khatiwada reflected on the importance of past and future reforms in the financial sector as a catalyst for economic growth and sound financial governance, the World Bank said in a statement.
Similarly, the recent reforms in the energy sector are expected to support the country’s ambitious plans to produce up to 15,000 MW of electricity within the next decade.
The first agreement will finance the Fourth Financial Sector Stability Development Policy Credit (DPC 4) with a credit of $100 million. The final in a series of financial sector DPCs initiated in 2013, the program supports key reforms through a strengthened legal and regulatory framework, consolidation of the financial sector, placing the financial sector safety net on a firm footing, and laying the ground for further reforms to broaden and deepen access to financial services for both business and individuals.
“These two credits will complement and support the priorities of the Government of Nepal by helping strengthen the energy and financial sectors, by bolstering their institutions, and by reducing vulnerabilities and increasing transparency,” said Qimiao Fan, the World Bank’s country director for Bangladesh, Bhutan and Nepal.
Under the second agreement, the World Bank will provide $100 million to support the First Programmatic Energy Sector Development Policy Credit Project (DPC). This project supports key policy, regulatory and institutional measures in the sector, including improving the financial viability of the Nepal Electricity Authority (NEA); establishing a regulatory framework that is transparent, autonomous, and accountable; encouraging electricity trade; and restructuring NEA to make it easier for the private sector to compete in the sector. The DPC is linked to the government’s key goal of providing electricity to a hundred percent of the population. This is the first World Bank DPC for Nepal’s energy sector.
The agreements were signed by joint secretary at the Ministry of Finance, Shree Krishna Nepal, and World Bank’s Country Director for Bangladesh, Bhutan and Nepal Qimiao Fan.