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Nepal and ADB

To support sustainable recovery from the COVID-19 pandemic and foster inclusive growth in Nepal, ADB will continue to invest in developing infrastructure, improving access to basic services, and protecting communities, especially the poor and vulnerable.

ADB's Work in Nepal

ADB Membership

Joined 1966

Shareholding and Voting Power

Number of shares held:
15,606 (0.147% of total shares)

Votes:
54,720 (0.411% of total membership, 0.632% of total regional membership)

Overall capital subscription:
$224.77 million

Paid-in capital subscription:
$11.25 million

In recent years, Nepal’s economic and social progress has included reducing poverty rates, increasing literacy rates, and narrowing gender disparities. The country aims to achieve the Sustainable Development Goals by 2030. However, poverty is still high in rural areas and among socially disadvantaged groups. The global outbreak of coronavirus disease (COVID-19) in 2020 and the subsequent nationwide lockdown to contain the contagion have adversely affected Nepal’s economic growth, equity, and poverty reduction achievements

Nepal was a founding member of the Asian Development Bank (ADB) in 1966. The bank’s assistance has since been directed mainly to improvements in energy security, transport, water supply and urban infrastructure services, agriculture and irrigation, and education.

Lake Pokhara, a major tourist destination in Nepal.

Since 1966, ADB has committed over $7 billion in financial and technical assistance for Nepal.

Cumulative loan and grant disbursements to Nepal amount to $4.39 billion. These were financed by regular and concessional ordinary capital resources, the Asian Development Fund, and other special funds.


ADB-Supported Projects and Programs

ADB provided immediate support to the Government of Nepal in its response to the COVID-19 pandemic. This included resources for containment and prevention, protection of economically vulnerable groups, and relief to small businesses. ADB committed a $250 million concessional loan to strengthen Nepal’s health systems and mitigate the economic and social impacts of the pandemic, particularly on the poor. The bank also helped provide critical personal protective equipment to enable frontline workers to safely screen and treat COVID-19 patients, while a $3 million grant from ADB’s Asia Pacific Disaster Response Fund provided emergency financing to improve quarantine facilities and procure laboratory and medical equipment, medicines, and supplies.

To improve power supply and distribution systems, ADB is supporting the government with significant investments. A $200 million concessional loan will finance, among other things, the reinforcement and modernization of the power supply system in Kathmandu Valley and two provinces where supply interruptions are frequent and prolonged. The project is aligned with the South Asia Subregional Economic Cooperation program on intraregional power trade. In addition, the $156 million Electricity Grid Modernization Project will finance the automation of grid substations throughout the country and help reform and strengthen the Nepal Electricity Authority.

ADB supports Nepal in its fight Against COVID-19

In aviation, ADB is providing a $150 million concessional loan to improve the capacity of the Tribhuvan International and Gautam Buddha airports, with the construction of a parallel taxiway extension and hangar aprons at Tribhuvan, and a new international terminal building at Gautam. ADB is also backing aviation sector reforms via a $50 million concessional loan to help restructure the current Civil Aviation Authority of Nepal and strengthen its oversight functions, management accountability, and operational efficiency. The program loan will also assist the government in securing external fiscal financing to mitigate economic and social shocks caused by COVID-19.

In water management, ADB is providing $50 million for the Priority River Basins Flood Risk Management Project to improve the resilience of communities to flooding in six river basins. Meanwhile, the Melamchi Water Supply Project has provided the longest tunnel in Nepal (26 kilometers), which will carry an additional 170 million liters of potable water every day from the Melamchi River to the Kathmandu Valley.

To expand access to quality education, ADB is helping finance the government’s School Sector Development Plan. The bank is also supporting government efforts in policy reform, institutional capacity building, gender equality and social inclusion, and climate change mitigation.

Students drink water from the community tap. ADB-supported initiatives helped provide 2.7 million people with access to clean water supply.

Nonsovereign Operations

As a catalyst for private investments, ADB provides financial assistance to nonsovereign projects and financial intermediaries. Total commitments in loans and equity investments from ADB’s own funds in 2020 amounted to $1.4 billion for 38 transactions in economic and social infrastructure, finance sector, and agribusiness. ADB also actively mobilizes cofinancing from commercial and concessional sources. In 2020, ADB mobilized $1.9 billion of long-term project cofinancing and $3.3 billion of cofinancing through its Trade and Supply Chain Finance Program and Microfinance Program. Total outstanding balances and commitments of nonsovereign transactions funded by ADB’s own resources stood at $14.3 billion as of 31 December 2020.

Total outstanding balances and commitments of ADB’s nonsovereign transactions in Nepal as of 31 December 2020 was $30.4 million, representing 0.2% of ADB’s total nonsovereign portfolio.

ADB has helped improve Nepal's energy security.

Financing Partnerships

Financing partnerships enable ADB’s financing partners, governments or their agencies, multilateral financing institutions, and commercial organizations to participate in financing ADB projects. The additional funds are provided in the form of loans and grants, technical assistance, and other nonsovereign cofinancing such as B loans, risk transfer arrangements, parallel loans and equity, guarantee cofinancing, and cofinancing for transactions under ADB’s Trade and Supply Chain Finance Program and Microfinance Program.

ADB began cofinancing operations in Nepal in 1975. Since then, sovereign cofinancing commitments for Nepal have amounted to $1.84 billion for 49 investment projects, and $89.24 million for 93 technical assistance projects. Nonsovereign cofinancing for Nepal has amounted to $210.6 million for five investment projects

In 2020, Nepal received $35 million grant cofinancing from the Government of Norway for the South Asia Subregional Economic Cooperation Power Transmission and Distribution System Strengthening Project.

A summary of cofinanced projects is available at Nepal: Cofinancing.

Operational Challenges

Accelerated and inclusive economic growth in Nepal is impeded by the country’s rugged terrain, infrastructure gaps, and inadequate human capital. Lack of adequate infrastructure services is a binding constraint to private sector investment, growth, and development.

Weak governance has long affected the effectiveness of development assistance and Nepal faces challenges to ensure the smooth implementation of federalism. These challenges include limited capacity at subnational levels, slow progress in requisite legislation and deployment of staff, lack of clarity about mandates and responsibilities of the three tiers of government, and a greater need for coordination among these tiers.

Start-up delays, low disbursement, contract management, and availability of materials also affect the implementation of ADB-supported projects in Nepal.

Future Directions

To support sustainable recovery from the COVID-19 pandemic and foster inclusive growth in Nepal, ADB will continue to invest in developing infrastructure, empowering businesses, and protecting communities, especially the poor and vulnerable. The bank will also assist Nepal in procuring and delivering COVID-19 vaccines safely and effectively.

Under its country partnership strategy, 2020–2024 for Nepal, ADB will support hydropower and renewable energy projects; improved road and air transport infrastructure; and better logistics and trade facilitation (especially under regional cooperation). The bank will work to reduce costs for businesses, attract private investment, develop livable cities and urban municipalities, deliver quality education and skills training, and lift agricultural productivity to boost rural incomes. Across its portfolio, ADB will continue to prioritize gender equality, social inclusion, disaster resilience, and environmental sustainability.

ADB will continue to work with Nepal to build sound institutional capacities for sector planning, high project readiness, effective implementation, and sustainable asset management.

The Building Climate Resilience of Watersheds in Mountain Eco-Regions project demonstrates how to build long-term climate resilience in vulnerable mountain regions.

This article was originally published in the ADB and Nepal: Fact Sheet. Updated yearly, this ADB Fact Sheet provides concise information on ADB's operations in the country and contact information.

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