Nepal - Second Technical Assistance Project

Document of The World Bank FILE COPY FOR OFFICIAL USE ONLY Report No. P-3564-NEP REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 5.6 MILLION TO THE KINGDOM OF NEPAL FOR A SECOND TECHNICAL ASSISTANCE PROJECT May 12, 1983 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit - Nepalese Rupee (NR) Since December 17. 1982 US$1 00 MNs 14.3 ABBRE.VIATIONTS AND ACRONYMIS DCA - Devetlopment Credit Agreement HMGN - His Majesty-s Government of Nepal IDA - International Development Association IFC - International Finance Corporation TA - Technical Assistance TOR - Terms of Reference UtTDP - United Nations Development Programme NEPAL FINANCIAL YEAR July 16 - July 15  FOR OFFICIAL USE ONLY KINGDOM OF NEPAL SECOND TECHNICAL ASSISTANCE PROJECT Credit and Project Summary Borrower: Kingdom of Nepal Amount: Special Drawing Rights (SDRs) 5.6 million (US$6.0 million equivalent) Terms: Standard Project Objectives The Credit would provide assistance for preparation and Description: of a number of high priority projects suitable for financing by the Government and external donors. In addition, it would finance activities in the field of pre-investment planning, engineering studies, and consultancy services and training for developing project preparation and implementation capacities of the borrower's institutions. Risks: There is a risk that development policies and priorities could change while sub-projects are under- way. This would be minimized by selection of sub-projects which are in support of a high-priority Government investment plan. The risk of the institution building component of the sub-projects being delayed or not being implemented or followed up by the concerned agency would be minimized by prior review by IDA and the Government of the agency's actual commitment to the component. Estimated Disbursements: US$ Million (IDA Fiscal Year) FY84 FY85 FY86 FY87 Annual 1.0 2.0 2.0 1.0 Cumulative 1.0 3.0 5.0 6.0 Staff Appraisal Report: Not required. Rate of Return: Not applicable. Map: IBRD 10154 RZ This document has a restricted distribution and may be used by recipients onl nltepromneo their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Thi doumet hs aresriced istibuionandmaybe sedby eciiens oly n te prfomane o   INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE KINGDOM OF NEPAL FOR A SECOND TECHNICAL ASSISTANCE PROJECT 1. I submit the following report and recommendation on a proposed development credit to the Kingdom of Nepal in an amount of Special Drawing Rights (SDRs) 5.6 million (US$6.0 million equivalent) on standard IDA terms to help finance a Second Technical Assistance Project. PART I - THE ECONOMY 1/ 2. The most recent economic report, "Nepal - Policies and Prospects for Accelerated Growth" (Report No. 3577-NEP) was distributed to the Executive Directors on October 15, 1981. The principal findings of the report and recent developments are described below. Country data are shown in Annex I. 3. Nepal is one of the least developed countries in the world. Per capita income is estimated at US$156 (1981) 2/ and health and education standards are well below the average for South Asia: life expectancy at birth is only about 44 years, infant mortality is 150 per thousand, and adult literacy is only about 20%. The population, estimated to be 15.0 million (1981), grew at a rate of about 2.6% per year during 1971 to 1981. About 95% of the population live in rural areas. 4. Population density with respect to arable land has reached alarming levels and is threatening to overwhelm the resource base of the economy. Cultivation has been extended beyond economically feasible and ecologically safe limits in the Hills, and together with denudation of forests to meet housing and fuel needs, soil erosion has become a critical problem. Firewood and water have become more difficult to obtain as the forests are reduced and springs and streams dry up. This degradation of the agricultural base has made even the present low level of living standards difficult to main- tain. 5. Agriculture accounts for nearly 60% of Nepal