Nepal - Poverty Reduction Support Credit Project

Page 1 1 1. INITIAL PROJECT INFORMATION DOCUMENT (PID) Project Name: NEPAL FIRST POVERTY REDUCTION SUPPORT CREDIT Region: South Asia Project ID: P074685 Borrower(s): Kingdom of Nepal Implementing Agency: Ministry of Finance His Majesty's Government of Nepal Contact Person: Mr. Bhanu P. Acharya Secretary Ministry of Finance Environment Category: U (Not Required) Date PID Prepared: July 30, 2003 Projected Appraisal Date: September 16, 2003 Projected Board Date: October 30, 2003 1. Country Background Thirteen years after the establishment of a multi-party democracy and the start of rapid economic liberalization, Nepal is in the midst of a fundamental but somewhat unnoticed shift away from business as usual. The aspirations of the Nepali people for better and more inclusive governance and public services have become increasingly frustrated over the years. The Maoist insurgency, which sharply escalated in 2001, was the starkest reflection of the rising tensions. Wide disenchantment with ineffective and corrupt government, however, has also created a strong internal pressure for reform. In parallel with the political process that is focusing on restoring peace and a more effective democracy, a renewed drive has been underway to build the economic and social foundation for sustained peace and poverty reduction. Much of the reform centers around creating a high-performance state that delivers public services efficiently and inclusively and supports broad-based economic growth. While there is substantial political uncertainty, a broad coalition of like-minded reform leaders in government and advocates among intellectuals, business leaders and civil society are pushing forward with a change agenda that is likely to stay its course even if the political process falters. 2. Objectives And Description Nepal