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Countries and Regions Country Partnership Strategies Document
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Country Strategy and Program 2005-2009: Nepal
VI. Risks, Performance Monitoring, and EvaluationA. Risks118. The CSP will be implemented in a very uncertain environment and carries major risks. The future trends, geographic spread, and level of intensity of the conflict are difficult to predict. The first risk is associated with the fact that, although the restoration of peace and security is the Government’s highest priority, the prospects for a peaceful resolution of the conflict in the near term remain uncertain. However, abrupt developments cannot be ruled out. In such a situation, ADB will need to respond quickly to security-related threats and opportunities. To ensure this, various steps are required. First, ADB operations will be designed prudently and flexibly to facilitate implementation in the present environment. Second, if evolving security considerations preclude effective project implementation, ADB will consider restructuring both the existing projects and the future project pipeline according to the priorities set out in the CSP. ADB's operations will, at all times, be undertaken in accordance with the United Nations security guidelines. On a routine basis, ADB will monitor reconstruction and rehabilitation requirements, so that assets destroyed in the conflict can be rebuilt and livelihoods restored quickly once a more conducive security situation emerges. 119. The second risk is that the Government’s commitment to reforms may falter if the frequent changes in government continue. To help reduce this risk, ADB assistance will help build partnerships between core government agencies, local think tanks, the private sector, and civil society, so that the reform agenda is well rooted in local needs and requirements, and can be implemented effectively in the present environment. Timely restoration of democratic processes is necessary to enhance the legitimacy and credibility of the reform process. However, changes in government could initially slow reforms as a new government may be reluctant to ensure continuity or may require time for familiarization. 120. The third risk is that faltering economic performance and further increases in securityrelated expenditures could crowd out vital development expenditures. The Government is mindful of the need to protect and sustain development spending, and the 3-year PRGF agreement signed with IMF accords priority to boosting development outlays. If the Government undertakes important and implementable institutional reforms, ADB may consider providing more assistance in the form of program loans. 121. The fourth risk is that some bilateral development partners may reduce their assistance unless the Government moves to end the political crisis and the conflict, and to deal with the allegations of human rights violations. Both the lending and TA programs envisage cofinancing in many ADB operations, which may not be forthcoming if the development partners reduce their assistance, thus constituting a risk to delivery of the CSP. ADB will encourage the Government to sustain good relations with the development partners, and will emphasize the need to remain engaged and foster inclusive development to provide the foundation for lasting improvement in internal security and good governance. B. Results-Based Monitoring and Evaluation122. Systematic monitoring and evaluation of the implementation of the CSP is a precondition for active management of the portfolio and learning for the future. Reliable monitoring and evaluation systems are important components in a results-based CSP. In establishing and applying these systems, ADB will harmonize its efforts with those of the Government, and of other development partners and stakeholders. 123. The monitoring and evaluation systems in the Government are closely linked with the various planning and budget processes. Project performance information flows systematically from the district through all levels of government. The National Planning Commission plays a key role in overseeing and improving monitoring and evaluation systems. Although there are weaknesses in the quality of data, the greater challenge is to make full use of available information on the delivery of results in order to foster learning and guide development decision making. (The Government's monitoring and evaluation system is discussed more extensively in Appendix 3.) 124. A Poverty Monitoring and Analysis System has been established in the National Planning Commission to coordinate, consolidate, harmonize, and analyze data from existing and new poverty monitoring mechanisms. If implemented effectively, the system could significantly help improve understanding both of poverty conditions and of the linkage between poverty and public policy. 125. This CSP is underpinned by participatory processes aimed at revealing actual needs, and at tapping local knowledge and initiative. Such processes will continue to be supported in order to anchor and inform ADB interventions as CSP implementation unfolds. Progress will be monitored toward achievement of agreed results. CSP monitoring will assess progress made in intermediate indicators (see Matrix), with interventions adjusted accordingly, depending on progress made. These indicators are selected on the basis of the ease of collection and reliability of data, as well as their relevance to ADB's support to Nepal. Baseline and target values for these indicators are available and will form part of the routine monitoring framework for ADB's operations. Regular assessment of progress made in delivering development results will assist ADB and the Government to reassess priorities and to define suitable interventions. 126. ADB will continue its partnership with the Government and other stakeholders, including other development partners, to jointly monitor and evaluate progress made in the Government's Tenth Plan through the process of an annual CSPU. In addition to tracking overall progress in poverty reduction and in the delivery of key results, the CSPU exercise will evaluate: (i) the security situation and its implications for delivering external assistance; (ii) the Government's reform program and its implications for fostering poverty reduction and forging a more inclusive society; (iii) sector portfolio performance; (iv) the lending and nonlending program in the following 3 years to ensure the relevance and effectiveness of ADB assistance; and (v) performance-based allocation of ADF resources. 127. ADB will assist the Government and other key stakeholders to improve their capacity to manage for delivery of development results. The Tenth Plan recognizes that there are weaknesses in public sector decision making, the poverty database, and the procedures for monitoring poverty reduction and for acting on the information that exists. ADB will help the Government build its capacity to manage for results, with particular emphasis on improving public policy formulation processes, strengthening monitoring capacity, and building capacity in selected ministries and line agencies to incorporate results-based planning and management approaches. In line with the priorities outlined in the Tenth Plan, more accurate monitoring of poverty and human development, under the coordination of the National Planning Commission, will ensure that timely information is available on poverty reduction outcomes and on the welfare consequences of ongoing reforms.
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