The government and the World Bank today signed two separate agreements that will help strengthen urban governance and the financial sector in Nepal in support of the country’s Covid-19 resilience and recovery efforts.
The agreements for the Nepal Urban Governance and Infrastructure Project and the Finance for Growth Development Policy Credit were signed by finance secretary Sishir Kumar Dhungana on behalf of the government and the World Bank country director for Maldives, Nepal, and Sri Lanka Faris Hadad-Zervos.
“We are thankful to the World Bank for the support in strengthening urban development and improving financial sector stability in Nepal,” finance secretary Dhungana said, adding that the projects support Nepal’s implementation of federalism and the financial sector reform agenda, while contributing to the government’s recovery efforts from the Covid-19 crisis.
The $150 million (around Rs. 18 billion) Nepal Urban Governance and Infrastructure Project will support municipalities located in two strategic urban clusters: Eastern-Terai region (Provinces 1 and 2) and Western region (Gandaki Province and Lumbini Province). Through Nepal’s’ first dedicated Urban Sector support, the project will finance strategic infrastructure in the targeted cities, based on the priorities of the municipalities and their citizens, according to a press note issued by the World Bank. “The project will also support capacity building for the municipalities for improved urban management and with strong focus on citizen engagement, enabling targeted municipalities to better plan, manage and execute service delivery and urban management activities.”
The project will finance small scale labour intensive public works, thus supporting economic recovery and creating temporary jobs for at least 20,000 people across the country, including women and other vulnerable groups. The project also includes a contingency emergency response component to allow for reallocation of project funds to support response and recovery in case of a national emergency, it reads.
Similarly, recognising several initiatives and strong commitment of the government in strengthening financial sector stability, diversifying financial solutions and increasing access to financial services, the multilateral development partner offered the $200 million (around Rs. 24 billion) Finance for Growth operation as a budgetary support. “It will support enhanced supervision of risks confronting the banking and financial institutions, especially in the context of the pandemic’s impacts,” the press note reads, adding that the operation will also help build capital, insurance, venture capital and private equity and disaster risk financing markets through regulatory reforms. “This will help open new investment opportunities for market actors and crowd-in private financing.”
The operation also focuses on expanding access to finance for households, women and firms through regulatory and other reforms that will attract additional inflows of international finance and mobilize digital services, credit infrastructure and literacy programs.
“The World Bank is committed to support the government in implementing its relief, recovery, and resilience plan to meet urgent demand while focusing on long-term goals and opportunities to rebuild stronger and better from the pandemic,” World Bank country director for Maldives, Nepal, and Sri Lanka Faris Hadad-Zervos said, adding that through the new projects, the bank looks forward to working with the government to strengthen institutions for effective service delivery as part of the federalism implementation process and build a resilient financial sector to boost economic recovery.
On the occasion, the secretary at the Ministry of Urban Development Dr Ramesh Singh, joint secretary at the Finance Ministry Shreekrishna Nepal, director general at the Department of Urban Development and Building Construction Maniram Gelal, World Bank Operation Manager for Maldives, Nepal and Sri Lanka Lada Strelkova, World Bank senior operation officer Bigyan Pradhan and other officials were also present.
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