Countries and Regions

	Table of Contents
p. 18 of 20 BACK | NEXT I. Country Performance Assessment II. Country Operational Strategy III. Sector Strategies IV. Regional Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - Nepal

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VII. ADB’s Operational Program

93. ADB's annual lending to Nepal for public sector projects has varied considerably, because of the relatively small program and the lumpiness of some of the projects (power sector projects in particular). The annual indicative planning figure for Nepal is set at $70-$80 million. The proposed lending program during 2001-2003 consists of 11 projects totaling $270 million, or an average of about $90 million per year, with some overprogramming. Average annual lending from 1995 to 1999 was $95 million, just above the average indicative planning figure (IPF) of $80 to $85 million during the period (the lending pipeline and technical assistance program is given in Appendix 4).

94. The proposed lending program has been prepared within the framework of the proposed ADB Nepal Poverty Reduction Strategy, the 1999 COS, and the performance indicators being developed under the performance based allocation approach. In 1999, one loan, the Rural Electrification, Distribution and Transmission for an amount of $50 million was approved, as a result of delays in processing of the Melamchi Water Supply Project and Corporate and Financial Governance Program loans because of the need for additional policy dialogue and project preparation. For 2000, the ADB lending program consists of four firm projects, namely Crop Diversification, Small Towns Water Supply and Sanitation, Corporate and Financial Governance, and Melamchi Water Supply with a total value of $116 million. While lending to Nepal is normally around $80 million annually, delays in implementation of the Melamchi Water Supply Project loan and processing of the Corporate and Financial Governance Program Loan led to the processing of only one loan in 1999 for $50 million (Rural Electrification), for an average lending level in 1999/2000 of $88 million.

95. The 2000 TA program will be for one PPTA and 7 ADTAs totalling about $5.2 million, including one cluster ADTA that will be implemented over a period of three years, with the value of the individual TAs in the cluster being shown in the year that they are approved. Consistent with the focus of the COS on building effective institutions, ADTAs predominate in 2000.

96. The lending program for 2001-2003 is formulated on the basis of the 1999 Country Assistance Plan, the 1999 CPRM, and the 2000 Country Programming Mission, and is consistent with the strategic thrust of the 1999 COS. The projects have been designed to reduce poverty, improve economic growth, increase human development, improve environmental management, and address key governance issues in the public and private sector. The major focus is on the agriculture sector, and sectors that support agricultural growth and rural development have been given high priority including support for poverty reduction, physical and social infrastructure, governance, and environment. The sectoral focus of the program is consistent with (i) the objectives of ADB's operations in Nepal and will assist in meeting the Government's development priorities and commitment to sector reform, (ii) ADB's role as a long-term development partner, and (iii) the assistance provided by other donor governments and agencies. The program has a narrower sectoral focus than in the past, linkages between projects to achieve overarching goals such as those of the APP, and higher priority for sectors where ADB is in a position to contribute to institutional and policy reforms. All of the projects at least in part address cross cutting concerns. About 64 percent of the lending program is for social infrastructure, while 18 percent is in agriculture, and 9 percent each for transport and communications, and others.

97. Core poverty and poverty intervention projects constitute 86 percent of the number of projects (see Appendix 5). The projects have been identified to directly reduce poverty, contribute to other development interventions, increase human development, improve environmental management, address key governance issues in the public and private sector, and assist in building effective institutions (see Appendix 6 for profiles of 2001 projects). Actual resource allocation will depend on performance in the five key country specific areas mentioned in para. 45, progress in implementing policy and institutional reforms, absorptive capacity as measured by annual portfolio disbursement, and an assessment of Nepal's debt repayment capacity. This is to ensure that future levels of ADB investments will be commensurate with the necessary policy and institutional environment of the country to generate and sustain desired development impact.

98. The focus of the TA program is on institutional strengthening and capacity building needed to develop more effective sectoral institutions, the strategic approach of the 1999 COS, and project preparation. The TA program for 2001-2003 includes 30 TAs with a total value of $21.7 million. The TA program for 2003 will be further refined during 2000, based on the results of planned sector strategy studies in several sectors. An annual average of four PPTAs is planned for the TA program to prepare the proposed four firm loans programmed for each year. The TA program is envisaged to be about $7 million annually, although this will vary in individual years.

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