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Regions and Countries Country Partnership Strategy Document
IV. Country Performance and Lending LevelsA. Lending Level Proposed25. Nepal’s ADF allocation, based on the performance-based assessment (PBA) exercise, is $83 million for 2002. The proposed lending program for 2002-2004 totals $306 million, or an average of $102 million per year, including overprogramming. This average is subject to change depending on the outcome of the PBA exercise in 2003 and 2004. The actual annual average ADF lending in 1994-2000 was $94 million. 26. ADB discussed and agreed upon with the Government the PBA's country-specific criteria including (i) no further deterioration in the fiscal deficit; (ii) moderate progress in anticorruption measures; (iii) progress in establishing a fully functional computerized personnel information system to improve accountability and transparency of the civil service; (iv) progress in agriculture, power, and financial sector reforms; and (v) some progress in cost-effective portfolio management. Performance against these indicators will determine the base, high, and low ADF lending scenarios (Appendix 3, page 3). Poor performance would result in a low case lending scenario of up to 20 percent less than the base case, while good performance would trigger a high case lending scenario of up to 20 percent higher than the base case. B. Loan Program27. The overarching objective of ADB’s CSP is to achieve sustainable reduction in poverty through (i) job generation and increased rural incomes resulting from faster and broad-based pro-poor economic growth, (ii) equitable improvements in basic social services to enhance human development, and (iii) good governance. The poverty analysis findings, views expressed at the Forum, funding agency coordination consultations, and the Country Programming Mission’s review of the 1999 Country Operational Strategy and subsequent country assistance plans were taken into account in preparing the CSP update. ADB will sharpen its focus to support a smaller number of key sectors in which ADB has been active and has a comparative advantage, although the sectors and projects in the program are generally similar to those in the previous strategy. The CSP will focus on up to seven sectors: (i) agriculture and rural development as the key sector; (ii) transport; (iii) energy; (iv) finance; (v) education (including nonformal education); (vi) water supply, sanitation, and urban development; and (vii) environmental management. When appropriate, program projects will be designed to target excluded groups to reduce poverty and inequality. The strategic approach of the program will continue to emphasize institutional strengthening. 28. The proposed lending program in 2002-2004 consists of 12 projects totaling $306 million (Appendix 4). The proposed program is consistent with the strategic thrust of the proposed CSP, emphasizing poverty reduction. Core poverty and poverty intervention projects constitute 75 percent of the total program in 2002-2004. Actual resource allocation will depend on performance measured by the PBA common criteria, including portfolio performance, and country-specific criteria. C. Technical Assistance and Economic and Sector Work Program29. The TA program focuses on (i) institutional strengthening and capacity building needed to develop more effective sectoral institutions, (ii) the strategic approach of the proposed CSP, and (iii) project preparation. The TA program for 2002-2004 includes 24 TAs with a total value of $15.8 million, including overprogramming. The indicative planning figure (IPF) of the TA program is envisaged to average about $4 million annually and will be supported with cofinancing resources. 30. The economic and sector work program forms the basis for ADB’s support of policy reform, capacity building, and institutional strengthening in Nepal. Six recently conducted or planned studies—an assessment of the progress of the Agriculture Perspective Plan, management reforms and efficiency improvements in the Nepal Electricity Authority, an urban sector study, a transport sector strategy, a livestock sector study, and an irrigation sector analysis—will provide guidelines for future ADB interventions in the agriculture, energy, transport, and urban development sectors. Governance in the public and private sectors is also a key area for the economic and sector work program. A country risk analysis will also be undertaken in 2001. The economic and sector work program for 2002-2004 is in Appendix 5. Project selection briefs and TA concept papers are in Appendix 6. D. Summary of Changes31. In the 2002 loan program, the community-based water supply and sanitation project has been deferred to 2003, and the information and communication technology for financial services project has been added. In 2003, the watershed management and rehabilitation project has been dropped from the 2003 loan program, and projects for women empowerment and integrated agriculture development added.
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