ADB Program in Nepal to Support More Inclusive Development in 2005-2009

MANILA, PHILIPPINES (7 October 2004) - ADB's focus in Nepal over the next five years will foster a more inclusive and results-based approach to better meet the needs of the poor, according to the Country Strategy and Program (CSP) endorsed today by ADB's Board of Directors.

The CSP for 2005-2009 will assist the Government to promote a greater balance between different regions of the country and improve access of the poor to basic services and opportunities for advancement. It will also address the needs of the most disadvantaged groups, such as women, ethnic groups, and lower castes.

It is ADB's first pilot results-based CSP that identifies the results sought by the Government, to which ADB will contribute, and the outcomes expected to be achieved by the CSP.

The strategies and sectors prioritized in the CSP are based on an assessment of poverty and wide consultations with all levels of government, civil society, beneficiary communities, and development partners.

"The development process should not only contribute to social and economic progress but also to stability by making sure those particularly disadvantaged are included," says Sultan Hafeez Rahman, ADB's Country Director in Nepal. "Only a more broad-based and inclusive process can break the vicious circle of exclusion and chronic poverty in the country."

The pace of poverty reduction has been slow in Nepal, which remains one of the poorest countries in the world with a per capita gross domestic product of around $270 and poverty incidence of 38%. The situation has been worsened by an armed insurgency that began in 1996 that caused loss of lives and livelihoods, out-migration, the dissolution of local elected bodies, and a climate of uncertainty and insecurity.

"The conflict has exposed deep-seated geographic, economic, social, gender, and ethnic inequalities within Nepalese society," the CSP says. "Addressing these inequalities and attaining high economic growth are vital to improving living conditions and to achieving a lasting solution to the conflict."

The CSP proposes a lending program of $350 million for the first three years, consisting of 11 projects. They will focus on developing rural areas, improving basic social services, helping women, promoting private sector development and improving public and private sector governance.

The actual level of assistance will depend on country performance and progress of the peace process.

"If a lasting peace is achieved, a higher level of assistance will be needed to help the country rebuild to realize peace dividends quickly and support reforms," adds Mr. Rahman.

To complement the lending program, 26 technical assistance (TA) projects and five studies are planned for 2005-2007, amounting to about $4 million per year. The TA will support project preparation, institutional development, training, and managing for development results. The five planned studies will help guide ADB work in rural development, connectivity, infrastructure, and regional development.

Since ADB lending to Nepal started in 1969 (as of the end of 2003), 104 public sector loans totaling $2.1 billion had been approved, all except one from concessional Asian Development Fund resources. The country had also received $109.5 million in technical assistance.

CSPs define ADB's medium-term development strategy as agreed with the country. A CSP update is prepared every year taking into account the continued relevance of the CSP and its implementation.

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