Nepal and ADB

The country operations business plan (COBP), 2018–2020 of the Asian Development Bank (ADB) is consistent with ADB’s country partnership strategy (CPS), 2013–2017 for Nepal, which focuses on infrastructure and human capital development, and agricultural transformation. It is also aligned with the Government of Nepal’s Fourteenth Plan, FY2017–FY2019 and ADB’s Midterm Review of Strategy 2020.

Nepal's GDP is forecast to grow by 4.7% in FY2018, down from a preliminary estimate of 6.9% in FY2017. Inflation is expected to rise to 6.5% in FY2018.

Nepal's GDP is forecast to grow between 5.2% to 6.2% in FY2017, and inflation to range between 6.0% and 6.5%. This report analyzes Nepal’s mid-year performance in real, fiscal, monetary, and external sectors for FY2017.

To implement the designation of eligible Asian Development Fund (ADF) loans as concessional ordinary capital resources (OCR) loans following the approval of the ADF-OCR merger by ADB's Board of Governors, it is necessary to amend the respective Legal Agreements.

This letter agreement effective 1 January 2017 applies to the ADF loans made by ADB to Nepal as referred to in this document dated 3 October 2016.

The 2016–2018 country operations business plan (COBP) for Nepal will support (i) better road and air transport connectivity, and trade facilitation; (ii) sustainable urban development and assessment of economic corridors to improve linkages with large, fast-growing neighboring countries; (iii) energy sector reforms and investments in generation, transmission, and distribution systems; (iv) upgrading skills and education; and (v) water resources development and management, and transformation from subsistence to commercial agriculture.

This macroeconomic update for Nepal analyzes FY2016 outcomes in real, fiscal, monetary, and external sectors. It forecasts FY2017 GDP growth to increase to 4.8% from 0.8% in FY2016, with inflation projected to decrease to 8.5%.

FY2016 GDP growth for Nepal is forecasted to slide further down to 1.5%, from 3.0% in FY2015, based on this macroeconomic update for Nepal. Inflation is also projected to increase to 10.5%.

The regional cooperation operations business plan (RCOBP), 2016–2018 of the Asian Development Bank (ADB) updates the RCOBP, 2015–2017. The proposed regional operations for 2016-2018 are consistent with the priorities of the regional cooperation strategy (RCS), 2011-2015. Thus, while the new RCOBP falls outside the time frame of the RCS 2011-2015, it is the fifth RCOBP in support of the current RCS.

The 2016–2018 country operations business plan (COBP) maintains the strategic thrust of the country partnership strategy (CPS), 2013–2017 of the Asian Development Bank (ADB) for Nepal, which focuses on infrastructure and human capital development to help attain high, employment-oriented, and sustainable growth. It applies sector selectivity and focus, with fewer but larger projects. 

This edition of Macroeconomic Update forecasts FY2016 GDP growth and inflation to be at 4.5-5.5% and 8.5%-9.5%, respectively for Nepal. It includes a section on accelerating post-eartquake reconstrution for faster recovery.