Nepal - Country assistance strategy public information notice (CPIN)

Report No. PIN6 NEPAL CAS: Public Information Notice World Bank Board Discusses Nepal Country Assistance Strategy On December 15, 1998, the World Bank's Board of Executive Directors discussed the Bank Group's Country Assistance Strategy (CAS) for Nepal, covering the period 1998-99 to 2000-2001. The CAS is available from the Info Shop or at www.worldbank.org/....... Country Context Nepal's economic modernization only began in the 1950s. Since then there have been a number of development achievements: the Government has provided greatly increased access to primary education, a country-wide network of health posts, a basic road network in the low-land terai and part of the hills, substantially expanded irrigation and community forestry, and a basic electricity and telephone network. But Nepal remains one of the world's poorest countries, with nearly half of its population living in poverty. In the rural areas, where 85 percent of Nepalis live, population increase has outpaced agricultural growth in recent years, hampering efforts to reduce poverty and promote social development. And women still lag far behind men in literacy, although the gap is narrowing as more girls go to school. More rapid progress in the fight against poverty has been hampered in recent years by ineffective and increasingly unstable governments. Corruption is perceived to be wide-spread, adversely affecting development progress and aid effectiveness. And while macro-economic management has generally been acceptable, the economy has suffered from the lack of proper management of public expenditures, a stagnation in the revenue/GDP ratio, large and inefficient parastatals, and a weak financial sector. Some recent improvements -- such as a turnaround in revenue collection and implementation of a Value Added Tax -- have prevented further decline, but not been sufficient to create broad progress on a major reform agenda. As a result, Nepal has not been able to adequately exploit its assets -- fertile land in the Terai, ready access to generous donor aid, strong tourism appeal, and enormous, if partly seasonal, water resources and hydropower potential. Bank Strategy The CAS defines how the World Bank plans to help Nepal achieve its primary development goal of reducing poverty. The strategy has been developed in consultation with the government and various civil society groups. To this end, extensive consultations were held in Kathmandu and a number of rural areas since January this year with village user groups, government officials at all levels, NGOs, the private sector, academics and journalists, to understand better the needs and aspirations of beneficiaries and how the Bank's development assistance can be made to reach them more effectively. The CAS aims to help Nepal overcome the formidable constraints to its development. Emphasizing the need for faster, more equitable and sustainable growth, the strategy focuses on two new prongs:  - Bringing resources closer to the beneficiaries, where they are most likely to be productively used; and - Encouraging donors to work together to foster the stronger governance needed to reduce waste and mismanagement. To these ends, the CAS supports: (i) a greater reliance on local stakeholder and private sector participation in project preparation and implementation; and (ii) closer cooperation among donors, linking donor assistance to improved governance. In addition, the CAS emphasizes the need for continued efforts to improve national economic and fiscal management, especially strengthening of the tax base, a better allocation and management of public resources, reform of the financial sector and further privatization. World Bank Assistance The Bank has supported Nepal's development efforts since 1984 through concessional IDA Credits. As of end November 1998, IDA's Nepal portfolio stood at US$eq.1.26 billion (US$eq. 1.1 billion disbursed and outstanding, and US$eq. 0.24 billion undisbursed). The CAS links the overall availability of IDA resources for Nepal to progress in meeting the overarching goals of ownership, development results and governance. To support future lending, the CAS also develops detailed sectoral strategies. Specific World Bank assistance in any sector will depend on the Bank's comparative advantage in providing advice and assistance in a given area and the Government's and the stakeholders' capacity to use donor resources productively. 1818 H Street, N.W., Room Jl-074, Washington, D.C. 20433, U.S.A. Tel: +1 202-458-5454, Fax: +1 202-522-1500 - 2-