Government and World Bank launch $4.6 million project to strengthen response to gender-based violence

The Institutionalising Gender-Based Violence Response in Federal Nepal Project was jointly launched today by the minister of Women, Children, and Senior Citizens Bhagbati Chaudhary and World Bank country director for Maldives, Nepal, and Sri Lanka Faris Hadad-Zervos.

The three-year project will help increase women’s and girls’ access to multisectoral gender-based violence (GBV) response services such as legal aid, psychosocial counseling, and medical support in six municipalities in Koshi and Lumbini provinces, a press note issued by the World Bank reads, adding that it aims to benefit 49,000 women and girls who have experienced violence through better access to quality services.

“Addressing gender-based violence is a priority for the government of Nepal," minister of Women, Children, and Senior Citizens Bhagbati Chaudhary said, adding that the project will help establish a functioning coordination system to link GBV response mechanisms at the municipal, provincial, and federal levels.

The project is financed by a $4.6 million grant from the State and Peacebuilding Trust Fund and will be implemented by the Ministry of Women, Children, and Senior Citizens.

The project will help strengthen institutional frameworks and capacity, pilot innovative GBV service models with a focus on improving service coverage and quality, and promote behavior change among first responders and local stakeholders for improved GBV response.

“This project will help empower women and girls to readily access GBV services, report violence, and seek help, especially in the most remote and hard to reach areas," World Bank country director Faris Hadad-Zervos said, adding that it is key to supporting Nepal’s development that is green, resilient, and inclusive.

The government and the World Bank signed the financing agreements for the project on April 24, 2024.

Foreign trade contracts by 2.55 per cent

As the country is engaged into political tug of war, all is not good in economy.

According to the foreign trade data published by the Department of Customs today, imports fell by 2.39 per cent to Rs 1,303.35 billion over the first 10 months of current fiscal year, compared to Rs 1,335.32 billion in the same period last fiscal year.

Likewise, exports also dropped down by 3.61 per cent in the same period.

Despite government's tall claims, foreign trade has been sluggish since the beginning of the current fiscal year, and has still not been able to pick up its pace.

Nepal exported goods worth Rs 126.17 billion in the 10-month of the current fiscal year, compared to Rs 130.90 billion in the same period last fiscal year, the data reveals.

With the drop in imports and exports, total foreign trade also shrink by 2.55 per cent to Rs 1,429.53 billion in the first 10 months of the current fiscal year 2023-24, compared to Rs 1,466.22 billion in the same period of the last fiscal year.

Likewise, the share of exports in total foreign trade shrank to 8.83 per cent, compared to 8.93 per cent in the first 10 months of 2022-23, it reveals, adding that the share of imports, however, increased to 91.17 per cent compared to 91.07 per cent in the first 10 months of the last fiscal year.

Though, Nepal has been trading with 168 countries, the country enjoys a trade surplus with only 34 countries. "Nepal enjoys the highest trade surplus of Rs 385.84 million with Denmark, followed by Afghanistan (Rs 262.01 million) and Norway (Rs 113.66 million)."

Nepal suffered the highest trade deficit of Rs 1,177.18 billion with India, that largest trading partner, followed by China (Rs 729.70 billion) and the UAE (Rs 238.55 billion).

Nepal imported goods worth Rs 1,303.35 billion from India while it exported goods worth Rs 126.17 billion to the southern neighbour.

Likewise, Nepal imported Rs 815.72 billion worth goods from China, whereas exported goods worth Rs 86.02 billion to the northern neighbour.

Petroleum products are, as always, Nepal's largest imports as the country imported diesel, petrol, and liquefied petroleum gas (LPG) with a combined value of Rs 218.48 billion in the 10 months period of the current fiscal year. "Raw materials for steel industries and smartphones were the other biggest imports."

The report also reveals that readymade carpets are Nepal's largest export with export earnings of Rs 8.79 billion, followed by black cardamom (Rs 6.91 billion) and palm oil (Rs 5.62 billion).

Nepal marks 20 years in WTO: Experts highlight trade deficit and lack of competitive edge

Experts today said that Nepal has not been able to reap the expected benefits after becoming a member of the World Trade Organisation (WTO).

Registrar of Kathmandu University Prof Dr Achyut Wagle, on the occasion, highlighted the increasing trade deficit every year and Nepal's inability to compete in trade as the main problems. He emphasised that such issues should be discussed continuously and that every policy and rule should be based on research and data.

Likewise, former vice chair of the National Planning Commission (NPC) and economist Prof Dr Biswo Poudel, speaking at a discussion '20 Years of Nepal's Accession to WTO' organised jointly by Kathmandu University School of Management (KUSOM) and the WTO Chairs Programme (WCP) today, echoed the sentiments, stating that world trade has not yielded the desired benefits for Nepal.

"Despite adopting open market policies, these have not contributed positively to Nepal's trade," he said, adding that the agriculture and energy sectors have particularly suffered from huge trade deficits.

Poudel also noted the significant role of India and China in Nepal's international trade and suggested that bilateral trade should gradually evolve into regional trade. Stressing the need to prioritise the industrial sector, as the service sector's share is increasing while both agriculture and industry sectors' contributions are decreasing, he said, that currently, agriculture and petroleum products account for 40 per cent of Nepal's total trade deficit.

Member Secretary of the NPC Dr Toya Narayan Gyawali, on the occasion, acknowledged some benefits from WTO membership but pointed out Nepal's failure to produce competitive goods, resulting in a high trade deficit.

He recounted Nepal's 34-year journey to WTO membership, which was achieved in 2004 as the 147th country. Despite being a least developed country, Nepal has struggled to leverage some benefits of WTO membership.

Gyawali mentioned that while trade policies were previously unpredictable and non-transparent, there has been progress with technical support and expanded market access. He also referred to a report prepared by the commission on the impact of Nepal's upgradation from a least developed country (LDC) and strategies for smooth transition.

Purbanchal University vice-chancellor Prof Dr Biju Kumar Thapaliya emphasised the importance of the supply chain in foreign trade. Highlighting Nepal's significant role in reaching the international market through auction market management and identifying buyers, Thapaliya noted that auction market management is a common issue for landlocked countries. He also suggested that Nepal needs to address it through geo-political discussions.

Executive Director of South Asia Watch on Trade and Environment (SAWTEE) Dr Paras Kharel, discussed the work done for trade facilitation since Nepal became a WTO member. He noted that both imports and exports have been encouraged due to trade liberalisation.

However, Nepal could not impose import duties due to various agreements, including bilateral treaties that exempted 50 per cent customs duty on rice. Kharel stressed that Nepal's exports cannot be competitive unless the domestic market improves, attributing the problem to a lack of production capacity.

Agriculture expert Dr Yamuna Ghale, on the occasion, stated that government agencies have not sufficiently discussed the pros and cons of WTO membership in international forums. Pointing out that poor institutional memory capacity has hampered negotiations and that Nepal's food security is weakening due to lack of production capacity, Ghale warned of potential crises if Nepal's food production remains under external control and highlighted the need for competitive export industries.

Immediate Past President (IPP) of the Confederation of Nepalese Industries (CNI) Vishnu Kumar Agrawal also noted that Nepal now has easier access to a large global market. However, he criticised the government for not fulfilling promises on export promotion and facilitation. 

According to Agrawal, production and productivity have been adversely affected as export promotion programs are frequently included in the budget but fail to deliver results.

Under Secretary at the Ministry of Industry, Commerce and Supplies Liladhar Adhikari, stated that Nepal has failed to effectively promote Nepali products. He emphasised that being a WTO member implies consistent customs levels and suggested that priority should be given to domestic industry to expand trade by ensuring no higher tariffs are levied.

Adhikari concluded that Nepali products need to become competitive in the domestic market to succeed globally.

Kathmandu University School of Management (KUSOM) organises such discussions as part of its media and outreach programs under the WTO Chairs Programme (WCP). 

Prof Dr Bijay KC, Dean of KUSOM, extended his heartfelt thanks to the organising committee, panel members, and participants, pledging to continue these discussions in the future.

Fiscal federalism progressing at a moderate pace, further reforms needed to strengthen outcomes

Nepal’s legal and institutional reforms under fiscal federalism and public financial management at the provincial and local levels have continued but at a moderate pace, says the World Bank’s Nepal Fiscal Federalism Update 2024.

A reduction of available financial resources in fiscal year 2023 for provincial and local governments, mainly due to a decrease in federal revenue, led to the first fiscal deficit at the subnational level since the outset of fiscal federalism in 2017, it says, adding that to enhance the outcomes of fiscal federalism and public financial management including improved revenue generation for all three tiers of government, the Fiscal Federalism Coordination Division at the Finance Ministry was designated to coordinate public financial management reform efforts and the preparation and implementation of a Fiscal Federalism Roadmap.

The report provides a comprehensive review of the progress of fiscal federalism in Nepal. The recommendations are well aligned with our national-level vision on smoothing the fiscal transfers to help subnational governments carry out their responsibilities effectively. "The report also informs and supports our ongoing efforts to clarify responsibilities among the three tiers of government and advance fiscal federalism,” said Chief Secretary Dr Baikuntha Aryal.

Building on the first edition of the Nepal Fiscal Federalism Update, the 2024 edition explores in-depth the key pillars of fiscal federalism in Nepal: Revenue Assignment and Administration; Expenditure Assignment and Administration; Inter-Governmental Fiscal Transfers; Borrowing and Capital Finance; and Fiscal Revenue from Natural Resources.

It recommends specific measures to upgrade the Inter-Governmental Fiscal Transfer system and establish a consolidated public financial management performance database that includes data from the subnational levels to enhance evidence-based decision making and transparency.

“The report highlights the need to upgrade institutional arrangements for the Intergovernmental Fiscal Transfers system to make the transfers more needs-based and timely, and to increase the fiscal autonomy of provincial and local governments, in order to improve fiscal federalism outcomes,” said  chairman of the National Natural Resources and Fiscal Commission Balananda Paudel, on the occasion.

The report also recommends strengthening provincial and local-level institutional arrangements for fiscal federalism and public financial management operations, including actions to improve budget credibility to improve delivery of services by subnational governments.

“Fiscal Federalism is a foundation for sustained service delivery by provincial and local governments," World Bank country director for Maldives, Nepal, and Sri Lanka Faris Hadad-Zervos said, adding that they need adequate financial resources and the ability to make spending decisions at the subnational level, in the spirit of federalism and the Constitution. "The World Bank is committed to supporting the Government of Nepal, in close collaboration with other development partners, to further solidify fiscal federalism in Nepal."

Nepal's banking industry leads the region in female representation but significant barriers remain in having more women in leadership roles: IFC Report

With 46 per cent female representation in its entry-level workforce, the banking industry in Nepal is ahead of other countries in South Asia in achieving gender parity. However, only 23 per cent of senior management roles are held by women, according to a new IFC report that examines gender diversity at six leading banks in Nepal.

The study—among the first of its kind in the region— identifies opportunities that can enable more women to advance to senior roles in the banking industry in South Asia.

This multi-country study, Women’s Advancement in Banking in Emerging South Asian Countries, focuses on commercial banks in Bangladesh, Nepal, and Sri Lanka, where women constitute 30 per cent of the banking sector’s workforce compared to the global average of 52 per cent, the report reads, underlining how several barriers—inequitable hiring, inadequate professional development, lack of fair evaluations, sociocultural constraints, and others—curtail women’s career growth prospects across the region.

“Diversity, equity, and inclusion are central to IFC’s work values," IFC country manager for Nepal, Bangladesh, and Bhutan Martin Holtmann said, adding that through nuanced, data-driven insights emerging from this new report, it is hoped to deepen the industry discourse around steps that need to be taken to improve the status of women in the banking workforce across South Asia.

In Nepal, women hold 42 per cent of all positions in surveyed commercial banks. Comparable figures for  Sri Lanka and Bangladesh are at 38 per cent and 18 per cent respectively. In senior management roles, women hold 23 per cent of executive positions in Nepali banks, compared to 20 per cent in Sri Lanka and 12 per cent in Bangladesh, the report adds.

Past studies have shown that commercial banks that have 15 per cent or more women in senior manager or higher roles, command up to 33 per cent higher return on equity than banks that do not. A growing body of evidence further links an increase in women’s representation in organizations to better performance on business metrics.

Accordingly, IFC's key findings and recommendations intended to help industry actors—executive managers in commercial banks, policymakers, industry bodies, and investors—direct their efforts to boost women’s representation in leadership in the banking industry.

The report recommends targeted efforts in four areas by banks and industry actors. These include establishing clear organisational commitments for gender diversity, the support system for women to reach leadership positions, policy changes to ensure workplace safety, and initiatives to support women's professional development and work-life balance.

“Nepal has a strong legal framework to promote women’s economic participation in the country. And these provisions are more comprehensive than other countries in South Asia,” said Holtmann. “While these progressive policies have allowed Nepal to be a leader in the region, more needs to be done to increase the number of women in leadership positions and to reach gender parity.”

IFC’s $56 million loan to Global IME Bank in February 2024 earmarked 25 per cent towards supporting women-owned small and medium enterprises (SMEs). Additionally, IFC investment in various banking and financial sector clients such as NMB Bank, Sanima Bank, and Siddhartha Bank  have been able to provide economic opportunities, and financial services to SMEs including those led by women.

MCA-Nepal signs contract to construct 400 kV New Butwal Substation at Nawalparasi

Though it took a long, Millennium Challenge Account-Nepal (MCA-Nepal) has awarded and signed a contract with Linxon India Pvt Ltd for the construction of the 400 kV New Butwal Substation in Nawalparasi (Bardaghat Susta West) district in Lumbini Province.

In a milestone achievement, the 400 kV Gas Insulated Switchgear (GIS) substation will be constructed within the contract duration of 39 months, according to a press note issued by the MCA Nepal.

Nepal Electricity Authority (NEA) managing director (MD) Kul Man Ghising and the US ambassador to Nepal Dean R Thompson, local authorities and elected representatives were also present at the signing ceremony in Bhumahi, Nawalparasi (Bardaghat Susta West) today.

"The US government is committed to working with the government of Nepal to ensure that the compact delivers on Nepal’s energy needs," ambassador Thompson said, addressing the event. "The 400 kV New Butwal Substation will improve Nepal’s transmission capacity contributing to reliable and affordable electricity for household consumption, expanded commercial and industrial enterprises and cross-border electricity trading."

“The 400 kV substation has been a priority for NEA and will supplement the existing 220 kV substation to significantly increase cross-border energy trade in the region,” NEA managing director Kulman Ghising said, on the occasion.

During the event, MCA-Nepal executive director Khadga Bahadur Bisht highlighted the overall progress being made in the implementation of the MCC Nepal Compact. "MCA-Nepal is expediting all works for the construction of the transmission lines and substations under the Electricity Transmission Project," he said, adding that the MCA-Nepal is at the final stages of the procurement process to sign the contract for the construction of the remaining two substations as well.

Along with this substation, MCA-Nepal is constructing two other substations in Ratmate, Nuwakot district and Damauli, Tanahun district under the Electricity Transmission Project funded by the US government’s Millennium Challenge Corporation (MCC) and the government of Nepal. The contractors for the remaining two substations are being selected.

The MCA-Nepal Board, chaired by the finance secretary, decided in its March board meeting to advance the 18-km Nepal portion of the New Butwal-Gorakhpur power transmission line to facilitate timely initiation of cross-border power trade as outlined in the agreement with India.

However, it took a long time due to technical problem in contract, and also tug-of-war between the NEA and MCA-Nepal. The tug of war has, according to the sources, created doubt on the successful completion of the MCC project within 5-year timeline, which is a fixed time period of the project.

World Bank approves $80 million to strengthen financial sector, increase access to financial services

May 6

The World Bank’s Board of Executive Directors today approved an $80 million development policy credit for Nepal to strengthen the stability of the financial sector, diversify financial solutions, and increase access to financial services.

The third Finance for Growth Development Policy Credit aims to improve the functioning of the financial sector to support private sector-led growth. The operation will strengthen the supervision of the banking and insurance sectors in Nepal and foster financial product innovations in capital, insurance, and disaster risk markets, claims a press note issued by the World Bank.

The operation will also increase financial inclusion through digitalisation, enhanced credit infrastructure and improved financial literacy, with a focus on women entrepreneurs, it adds.

“This project supports Nepal’s green, resilient, and inclusive development and will help create an enabling environment for private investment to contribute to Nepal’s economic growth, particularly benefiting the poor and vulnerable,” said World Bank country director for Maldives, Nepal, and Sri Lanka Faris Hadad-Zervos.

The operation also supports Nepal's climate agenda by, for example, enhancing supervision of climate risks by requiring disclosures of climate-related risks and impacts of the banking sector portfolio; introducing risk-informed pricing for insurance products, including climate risks; establishing a framework for the issuance of green bonds; and integrating climate-related mitigation and adaptation commitments into credit guarantee products.

"This operation supports the government’s transformative financial sector reform agenda to promote private sector-led growth," World Bank task team leader for the project Tatsiana Kliatskova said, adding that the reforms in banking, insurance, and capital markets are instrumental for the sector’s resilience and the critical role it plays to enable private capital mobilisation.

Economy to grow by 3.87 per cent, per capita income reaches $1456

The economy is going to grow by only 3.87 per cent at the consumer's price, in the current fiscal year.

According to National Statistics Office (NSO), the gross domestic production (GDP) is estimated to grow by 3.87 per cent despite the government's target of 6 per cent.

The economy will grow by 3.54 per cent at constant price in the current fiscal year, the report launched today reads.

Earlier, the government has projected the economy to grow by 4 per cent, whereas the World Bank (WB) has estimated it to grow by 3.3 per cent, the International Monetary Fund (IMF) by 3.1 per cent and Asian Development Bank (ADB) by 3.6 per cent due to slowdown in the economy.

Nepal’s economy will be the size of Rs 5.704 trillion by the end of the current fiscal year from Rs 5.348 in the last fiscal year, the report reads, adding that the per capita income is also expected to increase by $51 to $1456 in the current fiscal year from last fiscal year's $1405.

The increase in income is too low as Nepal is graduating to Developing Country (DC) status by 2026 from current Least Developed Country (LDC) status.

Due to the contraction in some sectors of the economy and the low capital expenditure has pulled the economic growth rate downwards, the report exposes.

Likewise, the report also shows that the share of service sector in the economy has reached 62.9 per cent. "The contribution of the secondary sector (industry-construction) is 12.5 per cent and the share of the primary sector (agriculture) is 24.6 per cent," it claims, adding that this fiscal year, the contribution of agriculture has increased slightly compared to last year, though the increase in agriculture sector alone cannot push the economic growth upwards.

Agriculture sector will grow by 3.05 per cent, while the non-agriculture sector will grow by 3.75 per cent, it adds.

The industrial sector has also contracted for the second year in a row due to the inability to increase production, according to the report. "This year, the industrial sector has contracted by 1.60 per cent, wheras last year there was a contraction of 1.98 per cent."

In 2021-22, the growth of the industry was 6.70 per cent, the report added estimating that there will be a contraction in the production of industries as there has been no significant improvement in the economy globally due to various adverse factors created in the economy in recent times.

Government, development partners launch Public Expenditure and Financial Accountability Assessments

Nepal has a robust legislative and institutional framework for public financial management, but further reforms are needed to strengthen fiscal and budget outcomes to support green, resilient, and inclusive development, says the third Public Expenditure and Financial Accountability (PEFA) Performance Assessment Reports.

The PEFA Performance Assessment Reports were jointly launched today by the government  with support from the Multi-Donor Trust Fund. The assessment is based on the internationally recognised PEFA Framework to assess the progress of Public Financial Management (PFM) across the government. Based on the assessments, the government will prepare a medium-term PFM Reform Strategy and Action Plan.

“Public financial management has the power to change people's lives and livelihoods,” finance minister Barsha Man Pun said, adding that Nepal is committed to establishing a strong and robust public finance system and transforming the public financial management landscape through rigorous reforms and adoption of digital governance.

The government partnered with the Nepal Public Financial Management Multi-Donor Trust Fund supported by Australia; European Union; the United Kingdom’s Foreign, Commonwealth, and Development Office; Norway; Switzerland; and U.S. Agency for International Development and administered by the World Bank to conduct the assessments. The reports consist of the PFM Performance Assessment, Climate Responsive PFM Performance Assessment, and Gender Responsive PFM Performance Assessment. Nepal is the second country after Bhutan in South Asia to undertake PEFA Climate and PEFA Gender Assessments. 

According to the PFM performance assessment, the government has deployed a range of information systems to enhance the efficiency of PFM. The adherence to international standards in the budget and accounts classification ensures comparability, accuracy, comprehensiveness, and transparency in financial information. Budgets are designed with a medium-term outlook, and the predictability of resource availability for spending units is at a high level. The fiscal transfers allocated to subnational governments exhibit transparency and adherence to established rules while the scope and coverage of both the internal and external audits are extensive. 

“Nepal’s successful completion of the PEFA assessment demonstrates its commitment to sound financial management practices,”  World Bank country director for Maldives, Nepal, and Sri Lanka Faris Hadad-Zervos said, adding that development partners, including the World Bank, are committed to supporting the next generation of public financial management reforms for Nepal’s green, resilient, and inclusive development. 

The assessment highlights the following areas for potential PFM reforms to achieve better fiscal and budgetary outcomes in the future:

• Restoring fiscal credibility through a sustainable medium-term expenditure framework, recalibration of fiscal rules, expenditure reprioritization, and risk management. 

• Improving public investment efficiency by reducing inefficiencies and building climate-resilient infrastructure. 

• Applying a climate and gender lens to fiscal decision-making to mainstream climate and gender considerations. 

• Enhancing fiscal transparency and accountability by enforcing fiscal rules and promoting accountability.

“As the PEFA assessment demonstrates, some crucial elements center on fiscal discipline and its impact on service delivery. Better fiscal discipline is needed for more effective, inclusive, and accountable delivery of services,” said acting mission director of USAID Nepal Karen Welch. “We, the development partners, bring assistance that supports the government’s efforts across many sectors, like health and education, environmental preservation, and attention to marginalised groups. Sound PFM allows us to work together to better benefit the people of Nepal.”

The programme was chaired by the finance secretary Madhu Kumar Marasini. chief secretary. Dr Baikuntha Aryal, revenue secretary Dr Ram Prasad Ghimire, and financial comptroller general Hari Prasad Mainali expressed their views and reiterated their commitment for PFM reforms as indicated by this assessment. The event also included a panel discussion on the topic: “How can Nepal improve capital expenditure to achieve development outcomes?”.

The event was attended by high-level government officials, accountability institutions, and development partners involved in PFM, including climate and gender agencies. 

Basant Chaudhary's BLC Holdings and Hiranandani Group's Yotta to build a Tier 3 data center in Nepal

Basant K Chaudhary led BLC Holdings and India's Yotta Data Services Pvt Ltd today signed an agreement to build the first-ever super cloud data center in Ramkot.

BLC managing director (MD) Megha Chaudhary and chief executive officer (CEO) of Yotta Sunil Gupta signed the agreement on behalf of their respective companies during the opening session of the Nepal Investment Summit 2024.

Under the agreement, the two will jointly build a data center in Ramkot at the estimated cost of around Rs 3 billion.

This is a crucial forward leap for Nepal in the data center space, according to the information of the BLC Holdings. "It also presents a solid opportunity for the Indian company to tap into the Nepali market."

BLC Holdings is owned by Basant K Chaudhary whereas Yotta Digital Services is a subsidiary of Indian conglomerate Hiranandani Group.

Hiranandani Group -- owned by billionaire brothers Surendra Hiranandani and Niranajan Hiranandani -- is one of the reputed real estate company in India, who has investments in health and service sectors also. 

Both the companies called the collaboration an important milestone.

According to Yotta, it will leverage local resources, regulatory capacity and local relationships, as well as BLC’s customer network, apart from strengthening Nepal’s access to its major platform, which will enable Nepal to access global expertise, international standards, and advanced technologies.

The data center will spread over 11 ropani of land in Ramkot, according to the BLC Holdings. "It produces an IT load of up to 4 megawatts. It will be a modern and advanced infrastructure, equipped with modern safety protocols."

In addition, it will also offer services to both enterprise and hyperscale customers, the company added.

Nepal’s first-ever 'super cloud' tier 3 data center is named 'K One'.

BLC MD Chaudhary, after signing the agreement, said that the K one data center in Ramkot will develop an IT ecosystem in Nepal. "It will be designed by Global Hyper Scalers," she said, adding that it will significantly boost Nepal’s profile in the data center industry and help create employment opportunities in the construction and IT industries.

The agreement includes cooperation for the establishment of world-class data centers, cloud services and artificial intelligence platform services in Nepal, Chaudhary added.

Yotta has two operational data centers, Yotta NM1 in Navi Mumbai and Yotta D1 in Greater Noida, Delhi.

Development Finance Institutions commit increment in investments in Nepal

The Second Development Finance Institutions (DFI) Mission, that started on Tuesday in Nepal, concluded today with a commitment to explore investment opportunities in Class B Banks, Micro-Finance Institutions (MFIs), and Digital Financial Service Providers, following productive deal facilitation sessions held during the three-day mission.

During a meeting with finance minister Barsha Man Pun yesterday, DFI representatives received assurance of the government’s commitment to facilitating foreign investments. In this regard, the finance minister highlighted several amendments made earlier this week to laws aimed at simplifying foreign investments.

“The agendas linked to challenges to ease investments by Development Finance Institutions are gradually being addressed by the government, which is a positive sign to mobilise local saving and attract foreign investments," chairman of the Board of the Swiss Investment Fund for Emerging Markets (SIFEM) Jörg Frieden said, adding that the recognition of DFIs as development and economic growth partners by the government is very encouraging for our investments.

The DFI Mission, organised by Invest for Impact Nepal (IIN), was attended by 14 Development Finance Institutions and Impact Investors from the United States, Europe, and the United Kingdom and Multilateral Agencies such as the IFC.

The mission’s primary focus was on accelerating DFI investments in Nepal's financial service industry beyond Class A Banks. During the mission, DFIs delegates also had meetings with the finance secretary Madhu Kumar Marasini and Nepal Rastra Bank’s governor Maha Prasad Adhikari and the deputy governor Bam Bahadur Mishra, to discuss on the execution of the Memorandum of Understanding (MoU) between the Nepal Government and Development Finance Institutions signed in October 2023 and the issues related to easing entry and exits for DFI investments, respectively.

Representatives of the Nepal Bankers’ Association (NBA) and DFIs also explored opportunities to scale up Nepal’s Financial Service Industry and the role of DFIs to promote sustainable financing.

The First Development Finance Institutions (DFI) Mission in Nepal was held in April 2023.

The Government of Nepal, Finance Ministry and Development Finance Institutions (DFIs) signed a Memorandum of Understanding on October 31, 2023.

The MoU outlines an agreement to enhance the inflow of private capital investment from DFIs into Nepal, the need for transformative investments to achieve UN SDG goals, to foster favourable investment climate, and transfer of technical know-how and knowledge to enhance Nepal’s competitiveness.

Nepal Rastra Bank in its amendment to the Foreign Investment and Foreign Loan Management Bylaws -2080 (February 2024), has recognised DFIs as a category of investors (government/inter-government owned institutions).

The DFI Investments in Nepal from 2008-2023 has amounted to $1.1 billion with the financial sector comprising for 59 per cent of the total.

Remarkably, between 2021 and 2023, the financial sector attracted $629.9 million investments from DFIs.

Attendees of the second DFI Mission included Asian Development Bank (ADB), British International Investment plc (BII), Société Belge d’Investissement pour les Pays en Developpement (BIO), Nederlandse Financierings Maatschappij voor Ontwikkelingslanden nv (FMO), Swiss Investment Fund for Emerging Markets (SIFEM), Deutsche Investitions- und Entwicklungsgesellschaft (DEG), Finnish Fund for Industrial Cooperation (FINNFUND), International Finance Corporation (IFC), US International Development Finance Corporation (DFC), Japan International Cooperation Agency (JICA), MicroVest, DAI Capital, responsibility and Symbiotics, according to a press note issued by the IIN.

Global commodity prices level off, hurting prospects for lower inflation

Global commodity prices are leveling off after a steep descent that played a decisive role in whittling down overall inflation last year, which could make it harder for central banks to cut interest rates quickly, according to the World Bank’s latest Commodity Markets Outlook.

The report also finds that a major outbreak of conflict in the Middle East could halt the inflationary decline that has occurred over the past two years.

Between mid-2022 and mid-2023, global commodity prices plummeted by nearly by 40 per cent. This helped to drive most of the roughly 2-percentage-point reduction in global inflation between 2022 and 2023. Since mid-2023, however, the World Bank’s index of commodity prices has remained essentially unchanged. Assuming no further flare-up in geopolitical tensions, the Bank’s forecasts call for a decline of 3 per cent in global commodity prices in 2024 and 4 per cent in 2025. That pace will do little to subdue inflation that remains above central bank targets in most countries. It will keep commodity prices about 38 per cent higher than they were on average in the five years before the Covid-19 pandemic.

"Global inflation remains undefeated," the World Bank Group’s chief economist and senior vice president Indermit Gill, said, adding, "A key force for disinflation—falling commodity prices—has essentially hit a wall. That means interest rates could remain higher than currently expected this year and next. The world is at a vulnerable moment: a major energy shock could undermine much of the progress in reducing inflation over the past two years.”

Persistently high geopolitical tensions over the past two years have propped up the price of oil and many other critical commodities even as global growth has slowed. The price of Brent crude oil, for example, surged to $91 per barrel earlier this month—nearly $34 per barrel above the 2015-2019 average. The Bank’s forecasts indicate that Brent prices will average $84 per barrel in 2024 before declining to an average of $79 in 2025, assuming no conflict-related supply disruptions. If the conflict in the Middle East were to escalate further, however, oil-supply disruptions could push up global inflation. A moderate conflict-related supply disruption could raise the average Brent price this year to $92 per barrel. A more severe disruption could see oil prices surpass $100 per barrel, raising global inflation in 2024 by nearly one percentage point.

“A striking divergence is emerging between global growth and commodity prices: despite relatively weaker global growth, commodity prices will most likely remain higher in 2024-25 than in the half-decade before the Covid-19 pandemic,” said Ayhan Kose, the World Bank Group’s Deputy Chief Economist and Director of the Prospects Group. “One critical factor behind this divergence relates to heightened geopolitical tensions that are keeping upward pressure on prices of major commodities and stoking risks of sharp price movements. Central banks must remain alert about the inflationary implications of commodity-price spikes amid elevated geopolitical tensions.”

The average price of gold—a popular choice for investors seeking 'safe haven'—is expected to hit a record in 2024 before moderating slightly in 2025. Gold holds a special status among assets, often rising in price during periods of geopolitical and policy uncertainty, including conflicts. Strong demand from several developing-country central banks, along with heightened geopolitical challenges, is expected to bolster gold prices throughout 2024.

An escalation of the conflict in the Middle East could also drive up prices of natural gas, fertilizers, and food, the report notes. The region is a crucial gas supplier—20 per cent of global liquefied natural gas (LNG) trade transits the Strait of Hormuz. If the LNG supply were interrupted, fertilizer prices would also rise substantially, likely driving up food prices. The Bank’s baseline forecast, however, is for overall food prices to decline somewhat—by 6 per cent in 2024 and 4 per cent in 2025. Fertilizer prices are expected to fall by 22 per cent in 2024 and 6 per cent in 2025.

Accelerating investment in green technologies has bolstered prices of key metals that are critical for the global clean-energy transition. Prices of copper—necessary for electricity-grid infrastructure and electric vehicles—surged to a two-year high this month. They are expected to rise by 5 per cent in 2024 before stabilizing in 2025. Prices of aluminum are forecast to rise by 2 per cent in 2024 and 4 per cent in 2025, bolstered in particular by the production of electric vehicles, solar panels, and other renewable-power infrastructure.

The report also contains a special focus section evaluating the performance of five well-known approaches used to forecast the prices of three key commodities—crude oil, copper, and aluminum. It finds that each of them suffers from certain deficiencies, but each also offers important advantages. As a result, the analysis suggests, forecasts are most accurate when they reflect a variety of analytical approaches—and a healthy dose of judgment.

Qatar Emir Al Thani wraps up Nepal visit, Nepal-Qatar sign two agreements, six MoUs

Qatar Emir Sheikh Tamim bin Hamad Al Thani concluded his two-day state visit to Nepal and left Kathmandu today afternoon.

President Ram Chandra Poudel and other high-ranking officials saw off Al Thani at the Tribhuvan International Airport (TIA) this afternoon in Kathmandu.

Earlier Nepal and Qatar signed two agreements and six memorandums of understanding (MoUs) following a delegation-level bilateral meeting at The Soaltee Hotel in Kathmandu. Prime Minister Pushpa Kamal Dahal and Qatar Amir Al Thani led their respective delegations in the meeting.

According to a press note issued by the Foreign Ministry, the two countries have signed different agreements and MoUs for cooperation in the fields of education, arts and culture, sports, news agencies, diplomatic training and attorney general offices.

Likewise, the private sector organisations of the two countries also signed agreement to further enhance economic relations between the two countries.

Emir Al Thani arrived in Kathmandu yesterday afternoon from Dhaka after wrapping up his state visit to Bangladesh. He held talks with President Ram Chandra Poudel at the Office of the President yesterday evening. 

Later, he attended a state reception organised by President Poudel in the honour of the Qatar Emir and the Qatari delegation.

After the bilateral meeting with Prime Minister Pushpa Kamal Dahal today, Qatar Emir Al Thani attended a luncheon hosted by Prime Minister Dahal.

Nepal has also decided to gift a pair of elephants to the State of Qatar.

Agreements and MoUs signed:

i) MoU for Cooperation in the Fields of Culture and Arts

ii) MoU for Cooperation in the Field of Education, Higher Education and Scientific Research

iii) MoU on Cooperation in the Field of Youth and Sports

iv) MoU on Cooperation between the Office of the Attorney General of Nepal and the Public Prosecution of the State of Qatar

v) MoU on Cooperation in the Field of Diplomatic Training and Education between the Institute of Foreign Affairs (IFA), Nepal and the Diplomatic Institute of Qatar

vi) Renewal of the MoU between Qatar Chamber and the Federation of Nepalese Chambers of Commerce & Industry (FNCCI)

vii) Agreement on Cooperation and Exchange of News between Rastriya Samachar Samiti of Nepal and Qatar News Agency (QNA)

vii) Agreement on the establishment of Joint Business Council (JBC) between Qatar Chamber and the Federation of Nepalese Chambers of Commerce & Industry (FNCCI)

Before signing agreements, Prime Minister Dahal held bilateral talks with Emir of Qatar Sheikh Tamim bin Hamad Al-Thani.

Taking stock of the existing relations so cordially subsisting between Nepal and Qatar, both leaders discussed about enhancing bilateral cooperation by furthering the avenues of partnerships.

Following the talks, the Prime Minister and Emir witnessed a signing ceremony of bilateral agreements and MoUs. 

Meanwhile, Prime Minister Pushpa Kamal Dahal 'Prachanda' has said that there should be an exchange of bilateral assistance between Nepal and Qatar in the best interests of both nations by further consolidating the bilateral ties.

During the bilateral talks, Prime Minister apprised the distinguished guest that Nepal offers ample and appropriate opportunities for investment in agriculture, tourism, and infrastructure sectors.

Stating that Nepali migrant workers in Qatar have served as a tool to further strengthen the friendly relations between Nepal and Qatar, he spoke of the need to deepen such ties in the days to come.

The Prime Minister also called on Qatar to facilitate the safe release of Nepali student Bipin Joshi, who has been missing since the conflict between Israel and Hamas.

Affirming that Nepal and Qatar always enjoy a cordial relationship, the Prime Minister said this relationship is founded on cordial friendship, mutual respect, trust, and assistance. "Qatar remains as a reliable friend of Nepal and such relations are getting deeper and extended," he said, adding that these relations are not limited to just an official level but have been expanded to the people-to-people level as well.

Describing Nepal as 'one of the attractive destinations for investment for the globe', Prime Minister Dahal said agriculture, energy, hydropower, infrastructure development, tourism, information and communications technology, service and hospitality sectors are suitable areas for foreign investment in Nepal.

"Nepal is a suitable place for producing organic agricultural products due to its geographical diversity," he said, adding that the Qatari investors would be encouraged to consider investment in this sector since Nepal was a center of attraction in tourism in the world parlance.

Remembering the ascent of the highest mountain in the world Mt Everest by the first Qatari man, Sheikh Mohammed bin Abdulla Al-Thani in 2013, the Prime Minister said that it helped contribute in the promotion of Nepal's tourism in the world.

On the occasion, PM Dahal requested to include Nepal in the list of Qatar's Tourism Authority's external tourism destination.

PM Dahal urged the Qatari government for operation of flights from Lumbini and Pokhara to Qatar as well.

Stating that there were effective and sufficient air transportation between Kathmandu to Doha, PM Dahal urged the Qatari government to consider operating flights from Lumbini and Pokhara to Doha as well.

Earlier, stakeholders had urged the government to take initiatives for operating direct flight between Bhairahawa and Qatar from Gautam Buddha International Airport during the Qatari Emir's visit to Nepal.

Siddhartha Chamber of Commerce and Industry's president Thakur Kumar Shrestha, requested the government to prioritise the proposal of operating direct flight between Bhairahawa and Qatar.

Likewise, PM Dahal observed that around 400,000 Nepalis migrant workers working in Qatar at present were an important bridge further cementing the bilateral ties between Nepal and Qatar.

"Nepal is going to establish vocational training and skill development center for aspiring Nepali migrant workers to Qatar," he said, urging Qatari government for its assistance in setting up such centre.

Nepal-Qatar Joint Business Council formed

A Joint Business Council between Nepal and Qatar has been established, which includes the private sectors of both the nations.

An agreement was reached between the two chambers today (on Wednesday) for the establishment of a council headed by president of Federation of Nepalese Chambers of Commerce and Industry Chandra Prasad Dhakal and president of Qatar Chamber Sheikh Khalifa bin Jassim Al Thani, in Kathmandu.

The agreement was signed by FNCCI president Chandra Prasad Dhakal and Qatar Chamber president Sheikh Khalifa bin Jassim Al Thani in the presence of Emir Sheikh Tamim bin Hamad Al Thani of Qatar and Prime Minister Pushpa Kamal Dahal.

The council will work in the areas of business expansion, investment promotion, technology transfer and tourism promotion, according to a press note issued by the FNCCI.

The Joint Business Council will be a permanent mechanism for dialogue with Qatar, a Gulf country experiencing rapid economic growth, the press note reads adding that the purpose of the Joint Business Council is to increase cooperation and understanding between the private sectors of Nepal and Qatar.

The council will play an effective role in attracting investments from Qatar and also expanding trade with the Gulf nation, which is known as a work destination for Nepalis. There is a high demand for agricultural products, water, herbs, spices and spice products in the Gulf countries. As Qatar is an investment destination due to its rapid economic expansion, the Joint Business Council will play an effective role in attracting investments in Nepal. The council will also work in the field of tourism promotion, it adds.

After the establishment of the council, cooperation between the two chambers is expected to further intensify and presidents of both the chambers are of the opinion that it will help in investment and business expansion.

"This agreement will further increase cooperation in the coming days," president of the Qatar Chamber Sheikh Khalifa bin Jassim Al Thani said, after signing the agreement.

Likewise, FNCCI president Chandra Prasad Dhakal said that there will be more initiatives taken through the council to increase cooperation between Nepal and Qatar. "The council will continue to work to benefit Nepal from Qatar's rapid economic development," he said adding that the establishment of the Joint Business Council will help in attracting more investments in hydropower, tourism infrastructure, agro-processing and information and communication technology sectors.

In addition, the agreement between FNCCI and Qatar Chamber has also been renewed. The new agreement was signed by FNCCI president Dhakal and Qatar Chamber president Al Thani.

The agreement was also signed in the presence of Sheikh Tamim bin Hamad Al Thani, Emir of Qatar and prime minister of Nepal Pushpa Kamal Dahal.

The first agreement between FNCCI and Qatar Chamber was signed in 2005. Since then, the two chambers have been cooperating in various ways for investment and business promotion.

Nepal-Tibet meeting reviews Aid Projects in Nepal

The first meeting of the Aid Projects to Nepal (2024-2028) took place in Lhasa, China’s Tibet Autonomous Region on April 23 and 24.

The first meeting was co-chaired by joint secretary of the Ministry of Federal Affairs and General Administration Kamal Prasad Bhattarai and director general of the Foreign Affairs Office of the China’s Tibet Autonomous Region Baiman Yangzong.

On the occasion, the discussions were focused on the coordination mechanism of aid projects by the Tibet Autonomous Region, China to Nepal in terms of work schedule, selection modality of the projects, and the ways of implementation and monitoring, according to a press note issued by the Nepali consulate in Lhasa.

During the meeting, both sides agreed to hold the meeting of aid projects twice in the first half of the year, so as to focus on the projects arrangements and twice in the second half of the year for the implementation and review of the implemented projects. Furthermore, the two sides underlined the need to enhance the level of support for improving the livelihood of people residing in bordering districts in the Northern Himalayan region of Nepal through the Aid Projects.

On Wednesday, joint secretary at the Ministry of Federal Affairs and General Administration and the head of Nepali Delegation Kamal Prasad Bhattarai paid a courtesy call on executive vice-chairman of the People’s Government of Tibet Autonomous Region of the People’s Republic of China Chen Yongqi. During the meeting, views were exchanged on matters of mutual interests; including the promotion of socio-economic linkages for further strengthening Nepal-China relations.

The second meeting of the Aid Projects to Nepal will take place on a mutually convenient date in May 2024, the press note reads.

The delegation also visited the Consulate General of Nepal in Lhasa, where Consul General Navaraj Dhakal welcomed and hosted Luncheon in honour of the joint secretary and his delegation. 

The Nepali delegation will visit Ali Prefecture and its vicinity on Thursday. The delegation is scheduled to return Kathmandu on Friday.

The delegation of Nepal included officials from the Ministry of Federal Affairs and General administration, Consulate General of Nepal in Lhasa. Likewise, the Chinese delegation comprised the high-ranking officials of the Foreign Affairs of China’s TAR.

The final breakthrough of the Nagdhunga main tunnel

Much anticipated breakthrough of the Nagdhunga Tunnel finally came true today. However, it will take another one year to finally moving the vehicles through the tunnel.

The excavation of the 2,688 m-long main tunnel was successfully completed, according to a press note issued by the Embassy of Japan in Nepal.

Ambassador of Japan to Nepal Kikuta Yutaka, on the occasion, congratulated all the people concerned, both Japanese and Nepalis, in overcoming so many challenges to reach this momentous milestone stating “You are the pride of country.”

The Nagdhunga Tunnel is the very first mountainous traffic road tunnel in Nepal. Worth Rs 22 billion, three-quarters of which is supported by the government of Japan

with highly concessional loans to Nepal, the construction work is contracted to Japanese engineering companies and they are making every effort for the sake of development of Nepal, the press note reads.

When it is finished after remaining interior work such as lining and connecting equipment, the convenience of traffic will be greatly improved, it reads, adding that it will be extremely significant for the promotion of the local economy as well.

The construction of the tunnel commenced in 2019. Digging a tunnel in the Himalayan mountainous region, which is still growing and has intricate strata, is an unimaginably difficult challenge. “The inside of the evacuation and main tunnels were repeatedly hit by unexpected floods and collapses during the extremely difficult excavation work,” it adds. “Outside the tunnels, heavy rain caused landslides on the slope faces and the Covid-19 pandemic delayed the progress.”

The Japanese teams has been working together with Nepali teams to take on technical challenges in the site, based on their experience in the construction of Sindhuli road, known as BP highway, which was also supported by the Government of Japan.

The project provides a unique opportunity to transfer advanced Japanese skills to young Nepali engineers, the press it would surely benefit the Nepali people in the future. “The Embassy of Japan believes that this project will be instrumental for Nepal in achieving sustainable economic development and further deepening of cordial relationship between Japan and Nepal.”

Nepal-Switzerland Bilateral Consultations Mechanism discuss development partnership

The fourth meeting of the Nepal-Switzerland Bilateral Consultations Mechanism (BCM) held at the Federal Department of Foreign Affairs (FDFA) in Bern, Switzerland today discuss a gamut of issues including development partnership.

Head of the Europe-Americas Division of Ministry of Foreign Affairs of Nepal, Joint Secretary Ganesh Prasad Dhakal and Assistant State Secretary for Asia and the Pacific in the FDFA of Switzerland Heinrich Schellenberg led the delegations of their respective countries, according to a press note issued by the Embassy of Nepal in Geneva.

Nepali delegation included ambassador of Nepal to Switzerland Ram Prasad Subedi and the Embassy Officials whereas the Swiss Delegation included officials from the FDFA and the Swiss Agency for Development and Cooperation (SDC).

During the meeting, the two sides reviewed entire spectrum of Nepal-Switzerland relations including economic ties, development partnership, multilateral cooperation, and contemporary global issues such as climate change and human rights.

The two sides also discussed the exchange of high-level visits, Nepal’s graduation from LDC category, progress made towards meeting the Sustainable Development Goals (SDGs), and ways to further enhance bilateral cooperation on trade, investment, tourism, science and technology, and vocational training, among others, according to the press note.

On the occasion Joint Secretary Dhakal requested the Swiss side to encourage the participation of their investors in the upcoming Nepal Investment Summit being held in Kathmandu this month.

The Nepali side thanked the Swiss Government for consistently placing Nepal as a priority country for Swiss Development Cooperation. While expressing satisfaction over Nepal’s progress, the Swiss side assured of their continued support to Nepal’s development endeavours.

Following the meeting, the head of the Swiss delegation hosted a luncheon in honour of the visiting Nepali delegation.

Nepal-Switzerland Bilateral Consultations Mechanism was established in 2015 and the next meeting will be held in Kathmandu on mutually convenient dates.

Though, World Bank claims growth rebound, it downgrades Nepal’s GDP growth to 3.3 per cent

Nepal’s economy is expected to grow by 3.3 per cent in the current fiscal year (FY2024), driven by revived tourism and a pickup in hydropower exports, according to the World Bank.

On the demand side, private consumption will drive growth, supported by a substantial increase in remittance inflows, according to the World Bank’s twice-a-year country development update,

However, the World Bank on October 3, 2023 -- six months ago -- has projected Nepal's economy to grow by 3.9 per cent. In six months, the development partner has downgraded Nepal's economic growth to 3.3 per cent from 3.9 per cent.

However, the latest 'Nepal Development Update, Nepal’s Economy on a Recovery Path, but Private Investment Remains Low', projects a further rebound in growth of 4.6 per cent in the next fiscal year 2025. 

The forecast is subject to multiple risks, including a growth slowdown in partner countries, notably India, Gulf countries, and Malaysia which could lead to a drop in remittances and tourism, the report reads, adding that further business environment reforms aimed at attracting more private investment will be needed to support medium-term growth.

“Strengthening the implementation of capital expenditure, boosting business confidence, and strengthening Nepal's international competitiveness are key to stimulating economic growth and reducing poverty,” said World Bank country director for Maldives, Nepal, and Sri Lanka Faris Hadad-Zervos.

The Nepal Development Update is prepared in parallel with the South Asia Development Update, a twice-a-year World Bank report that examines economic developments and prospects in the South Asia region and analyses policy challenges countries face.

The April 2024 edition titled 'Jobs for Resilience' shows growth in South Asia is again higher than any other emerging markets and developing country region in the world, projected at 6 per cent in 2024 and 6.1 per cent in the next year 2025.

But this strong outlook is deceptive, says the report. For most countries, growth is still below pre-pandemic levels and is reliant on public spending. At the same time, private investment growth has slowed sharply in all South Asian countries, and the region is not creating enough jobs to keep pace with its rapidly increasing working-age population.

“South Asia is failing right now to fully capitalize on its demographic dividend," World Bank chief economist for South Asia Franziska Ohnsorge said, adding that it is a missed opportunity. "If the region employed as large a share of the working-age population as other emerging markets and developing economies, its output could be 16 per cent higher."

The South Asia Development Update recommends a range of policies to spur firm growth and boost employment, including increasing trade openness, improving business climates and institutions, removing financial sector restrictions, improving education, and strengthening legal protection of women’s rights. And these measures would also help lift employment growth and boost productivity, and free up space for public investments in climate adaptation.

Not only party chief and home minister Rabi Lamichhane, his close aides including labour minister Aryal implicated in cooperative fraud

Its an old case against incumbent Home Minister and Rastriya Swatantra Party (RSP) chair Rabi Lamichhane of accusations of misappropriating cooperative funds against.

The main opposition party Nepali Congress (NC) has been vehemently opposing his appointment as Home Minister suspecting the investigation could be compromised, due to his position.

But, there seems whole lot of Lamichhane's party comrades are in the soup. More RSP comrades are accused of cooperatives fruad is no coincidence.

Its Lamichhane's close aide and incumbent Labour minister, who is the vice-chair of RSP, Dol Prasad (DP) Aryal, who is now entangled in a cooperative fraud scandal.

During Aryal's tenure as vice-chairman of the 'Hamro Naya Agricultural Co-Operative,' depositors were unable to retrieve more than Rs 40 million, according to a complaint letter they have sent to Department of Cooperatives under the Ministry of Land Management, Cooperatives and Poverty Alleviation.

Last January, the government declared 'Hamro Naya Agricultural Co-Operative' as problematic entity, after it failed to return the depositors' funds.

The complaint filed by the cooperatives's depositors include the names of DP Aryal and Rastriya Swatantra Party's joint general secretary Kabindra Burlakoti, who served as directors of the cooperative, with Surya Gurung, the then chair, when Aryal was vice-chair.

A total of 26 depositors lodged a complaint seeking refunds during Aryal's tenure as vice-chairman, according to the complaint letter.

Despite numerous attempts, the depositors did not receive their money back, forcing them to file a formal complaint with the Department of Cooperatives.

Aryal left the co-operative in 2023 after he introduced Geetendra Bahadur (GB) Rai, a business associate of RSP chair Lamichhane, into the cooperative. Upon transitioning into active politics, Aryal left the cooperative.

However, the cooperatives was in financial trouble during the tenure of Gurung, Aryal and Burlakoti.

"It was DP Aryal who brought GB Rai to the cooperative," one of the directors said, adding that the cooperative faced financial trouble during his tenure."

Surya Gurung stepped down from the board of directors when GB Rai assumed control, as chair. GB Rai is the same person, who is absconding in yet another cooperatives fraud case, which also involved the incumbent home minister Lamichhane.

Sections 104 (1) (a) to (f) of the Cooperative Act, 2074, were invoked when action was taken to address the cooperative’s failure to refund members' savings, in violation of the cooperative rules, regulations and values. As per the recommendation of the Registrar of the Cooperative Department, the Ministry of Land Management, Cooperatives, and Poverty Alleviation declared Hamro Naya Agricultural Co-Operative as problematic under section 104 (2) of the Act. The ministry has referred the matter to the Problematic Cooperative Management Committee, established under Section 105 of the same Act, to manage the cooperative's assets and liabilities.

Actually, declaring problematic is one of the legal loopholes to save the cooperative frauds, according to the director, who didnot want to be named.

According to member secretary of the Problematic Cooperative Management Committee Keshav Prasad Paudel, some 34 individuals had filed complaints regarding the non-repayment of deposits totaling over Rs 40 million. "We have secured and sealed the cooperative's documents for examination," he said, adding that the documents are currently under review. "But most of the confiscated computers donot have harddisk, as it is suspected the Aryal-Gurung-Rai-Burlakoti nexus tried to destroy the proofs of fraud."

When Aryal's team left the cooperative after bringing in GB Rai, the victims filed a complaint with the Department of Cooperatives demanding the return of their deposits.

RSP vice-chair and Labour Minister Aryal had invested Rs 2.3 million Hamro Naya Agricultural Co-operative.

Though, he claims that he voluntarily resigned in 2023, and was not involved in fraud, the cooperative depositors donot buy his argument.

According to the Nepal Police sources, the Central Investigatoin Bureau (CIB), had been investigating the case, but sudden chamge in the government has postponned for the timebeing.

Government, developments partners agree on harmonisation of disbursement practices

The government and six Multilateral Developments Banks (MDBs) and International Financial Institutions (IFIs)—Agence Française de Développement, Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB), International Fund for Agricultural Development (IFAD), OPEC Fund for International Development, and the World Bank (WB)—agreed to work together to harmonise disbursement procedures and practices to help enhance operational efficiency and achieve Nepal’s development goals.

The agreement was reached at a two-day ‘MDBs Disbursement Harmonisation Workshop’ organised in Kathmandu on March 25-26 by the MDBs and IFIs, in close partnership with the Finance Ministry.

“Fostering a unified disbursement system among all MDBs will help facilitate allocation of funds, enhance operational efficiency, and ensure timely disbursement of funds to the government to achieve development results,” said finance secretary Dr Krishna Hari Pushkar, on the occasion.

According to a press note issued by the organisers, the government and MDB-IFIs agreed to focus on various future collaborations including harmonisation of flow of funds, reporting, legal and disbursement arrangements for the three-tier structure of government; standardisation of reporting templates across MDB-IFIs’ operations in Nepal to reduce the administrative burden on the government; and strengthening and aligning country system with MDBs-IFIs to the extent possible.

“Unprecedented challenges demand urgent action and the need for harmonisation among the MDB-IFIs," the World Bank vice president and controller Pamela O’Connell said, adding that the World Bank, in its continued efforts to improve operational efficiency and support better development results for its mutual clients, is committed to work with co-financing partners in the area of disbursement harmonisation.

On the occasion, government representatives and MDB-IFIs agreed to carry froward the momentum by way of a Memorandum of Understanding (MoU) between the government and MDB-IFIs, which will be prepared and implemented in a phased manner.

The Kathmandu Declaration would be a model to be emulated in other countries, according to the press note.

“To achieve sustainable economic growth and poverty reduction it is imperative that budget allocation is fully utilised," Financial Comptroller General Hari Prasad Mainali said, adding that the government is committed to strengthening reforms to build transparency and accountability of public financial management systems and strengthen service delivery.

The workshop was attended by high-level representatives from the government and MDB-IFIs.

Participants discussed disbursement and implementation-related opportunities and challenges, and the way forward to supporting MDB-IFIs operations in Nepal. In view of the federalism transition, legal and disbursement options available for project implementation at provincial and local levels were also discussed, and international experiences were shared.

Third Nepal-Germany bilateral consultation mechanism meeting discuss cooperation

The third meeting of Nepal-Germany Bilateral Consultation Mechanism in Kathmandu today took stock of overall state of the bilateral relations and cooperation between Nepal and Germany.

Division Head (Joint Secretary) of the Europe America Division under Foreign Ministry Ganesh Prasad Dhakal and director for Indo-Pacific Policy, South Asia, Afghanistan of the Federal Foreign Office of Germany Erik Kurzweil led their respective delegations to the meeting.

At the outset, the two sides reviewed the overall Nepal-Germany relations and ongoing cooperation, according to a press note issued by the Foreign Ministry. 

Joint Secretary Dhakal appreciated the continued German cooperation to Nepal’s development endeavours, whereas director Kurzweil shared about ongoing development cooperation extended to Nepal under German development assistance.

The two co-chairs stressed the need of continuing interactions, including the exchange of high-level visits, between the two countries. “They underscored the importance of enhancing partnerships in productive sectors, including investment and trade,” it reads, adding that Dhakal briefed about the business-friendly policies adopted by Nepal and requested the German side to encourage their participation in the upcoming third Nepal Investment Summit and explore possibilities of further investments in Nepal.

Matters of regional and global importance were also discussed during the meeting. The two co-chairs agreed to work together on matters of common interest, including climate change, at various multilateral for a. Views were also exchanged to further strengthening cultural relations, enhancing people-to-people contacts and connectivity, among others.

The Nepali delegation comprised of senior officials of the Foreign Ministry; Finance Ministry; Ministry of Culture, Tourism and Civil Aviation; Ministry of Forest and Environment; Ministry of Home Affairs; and Ministry of Energy, Water Resources and Irrigation.

Likewise, the German delegation included ambassador of Germany to Nepal Dr Thomas Prinz and other officials of the Embassy of Germany.

Nepal-EU joint commission meeting discuss graduation from LDC, GSP

The 15th meeting of the Joint Commission (JC) between Nepal and the European Union (EU) discussed gamut of bilateral issues including graduation from LDC, GSP and investment promotion, in Kathmandu today.

A broad range of issues of mutual interest were discussed during the meeting, according to a press note issued by the Foreign Ministry.

Nepal and the EU are also celebrating the 50th anniversary of their diplomatic relations this year.

The meeting was co-chaired by foreign secretary Sewa Lamsal and deputy managing director for Asia and the Pacific of the European External Affairs Service of the EU Paola Pampaloni.

The two sides reiterated their commitment to work together in upholding democracy and human rights, promoting good governance, realising Sustainable Development Goals (SDGs), promoting investment, and coping against global challenges such as climate change.

The Nepali side, on the occasion, highlighted achievements and bottlenecks in the realisation of SDGs.

Likewise, the EU welcomed Nepal’s transition strategy to graduate from LDC status and expressed their commitment to continue their cooperation through the Multi-Annual Indicative Programme (MIP).

Nepal welcomed the EU’s MIP for the term 2021-2027. The Nepali side also appreciated the MIP for aligning with the plans and priorities of Nepal.

Nepal and the EU also reviewed the progress of EU’s development cooperation in various sectors.

The meeting acknowledged the sub-commission meeting on development cooperation held on March 6.

On regional and multilateral processes, Nepal and the EU also discussed about SAARC and BIMSTEC. The two sides underlined the importance of effective multilateral cooperation.

The EU praised Nepal’s contributions to UN Peacekeeping Operations, the press note reads, adding that Nepal and the EU reaffirmed their commitments to cooperate within the United Nations (UN), World Trade Organisation (WTO), and other global fora to promote effective multilateralism and the rules-based international order. "Human rights including social inclusion were also discussed at the meeting."

The Nepali side reaffirmed its commitment to upholding human rights and concluding transitional justice as soon as possible.

The EU expressed hope on the early conclusion of Nepal’s peace process. 

The two sides unanimously agreed that corruption, including money laundering and financing of terrorism, is a major impediment to sustainable development.

The EU took note of Nepal’s ongoing legislative efforts and underlined the importance of compliance and enforcement, the press note adds.

The EU commended Nepal’s remarkable strides on inclusive participation and women empowerment. Both sides praised the EU flagship action 'Empowered Women, Prosperous Nepal', launched last year by the EU and the Ministry of Women, Children and Senior Citizens of Nepal.

The EU commended Nepal for the child grant schemes and encouraged its expansion.

The EU also appreciated the achievements made by Nepal in its socio-economic transformation. The two sides appraised the recent developments in upholding the democratic processes and institutions, and stressed the important role of civil society and media for strengthening democracy and good governance.

"The Nepali side underlined their multiple vulnerabilities of natural disasters, exacerbated by the impacts of climate change, and discussed climate adaptation finance," it reads, adding that the EU complimented Nepal for its position on Climate Change and the ‘Mountain Agenda’ during COP28 and also on its ambitious goal of reaching net zero carbon status by 2045.

"The Nepali side expressed gratitude for the EU's generous assistance following the Jajarkot earthquake, in post-earthquake resilient reconstruction and recovery efforts, and appreciated the cooperative partnership in disaster risk reduction."

The two sides exchanged their views on bilateral trade relations, including the criteria for acceding to the Generalised Scheme of Preferences Plus (GSP+).

Nepal, on the occasion, also expressed appreciation for the exchanges under the Erasmus+ programme, and the scholarships offered for Erasmus Mundus Joint Master Degree programmes, including people-to-people contacts. 

The EU and Nepal underlined that air safety remains a key priority area in their bilateral relations. Nepal assured of addressing all observations of the EU’s assessment visit in September 2023, while the EU will support Nepal in this process. Both sides agreed to follow-up at technical levels.

The next Joint Commission meeting will take place in Brussels next year.

Switzerland-Nepal fact-finding mission concludes unlocking trade opportunities

The Embassy of Switzerland, in collaboration with Switzerland Global Enterprise (S-GE) and the Nepal Swiss Chamber of Commerce and Industries (NSCCI), successfully conducted the second fact-finding mission with a Swiss business delegation's visit to Nepal from March 17 to 20.

The mission aimed to acquaint Swiss companies with the Nepali market and its key stakeholders, according to a press note issued by the Embassy of Switzerland in Nepal.

Participating were esteemed organisations such as Ferring, Roche, Stone Step, and Swiss Re, it reads, adding that the delegation engaged in high-level meetings with notable entities including the Ministry of Health, Kathmandu Metropolitan City, Department of Drug and Administration, Nepal Electricity Authority (NEA), National Public Health Laboratory, Department of Health Service, development partners, various public and private hospital and offices. “Additionally, the delegation interacted with various private sector companies primarily focused on health, Insurtech and infrastructure development.”

The ambassador of Switzerland to Nepal Dr Danielle Meuwly, highlighted the success of the first fact-finding mission, that took place in November 2022, citing achievements like the air service agreement between Nepal and Switzerland.

She expressed optimism that this second mission will contribute to similar outcomes, supporting Nepal's transition from aid to trade. 

The meaningful discussions held with government officials, experts, development partners, and private companies were well received by the Swiss delegation, significantly enriching their understanding of Nepal’s business sector and identifying potential investment areas.

Disasters cost Nepal $7 billion in last four decades

Nepal's disaster landscape is impacted by earthquakes, floods, landslides, and droughts, which collectively have caused almost $7 billion in damages from 1980 to 2020. These disasters have affected the country's capacity to build financial resilience in the face of looming disasters., according to a report.

The government has spent Rs 50 billion ($0.4 billion) between 2012 and 2020 in disaster response and recovery. The expenditure data indicates that this is not financially sustainable in the long run, which demands the development of risk transfer solutions. In response to this pressing need, the UN Development Programme Nepal today launched the Insurance and Risk Finance Initiative.

It is part of UNDP's global initiative, the Insurance and Risk Finance Facility (IRFF), which is being implemented in over thirty countries. This initiative seeks to prioritise financial resilience by tapping into the benefits of insurance and risk financing mechanisms.

During the event, the Country Diagnostic Report was jointly unveiled by revenue secretary Dr Ram Prasad Ghimire, chief executive officer of the National Disaster Risk Reduction and Management Authority (NDRRMA) Anil Pokhrel and UNDP's resident representative Ayshanie Medagangoda-Labé.

The diagnostic highlighted that Nepal is one of the top ten countries most affected by climate change and is highly vulnerable to floods, landslides, earthquakes, and droughts, according to a press note issued by the UNDP.

The report also showcases that the government is committed to fostering the insurance industry's ability to provide accessible and affordable insurance products, as evidenced by recent legal updates such as the Insurance Act 2079, which contains several microinsurance provisions.

While credit-life microinsurance and agriculture insurance offer financial protection to low-income and vulnerable Nepali households, the overall inclusive insurance market is still lagging due to low awareness about insurance and data gaps that prevent insurance companies from offering products that meet the needs of customers, it adds.

Revenue secretary Dr Ram Prasad Ghimire, on the occasion, reiterated the government's commitment to delivering risk finance solutions, mentioning that the government has already initiated the development of a  Fiscal Risk Management Framework.

Likewise, CEO of NDRRMA Anil Pokharel highlighted the importance of collaboration between government, development partners and the private sector to address increasingly frequent and complex climate and disaster risks. 

“Insurance and risk financing are among the solutions that can contribute to strengthening a comprehensive risk management approach for any country and community,” UNDP resident representative Ayshanie Medagangoda-Labé, on the occasion, said, adding, “We need to tap into the insurance market opportunities, leaving no one behind,”

The Initiative will work closely with government partners such as the Finance Ministry, Nepal Insurance Authority and National Disaster Risk Reduction and Management Authority to improve legal and regulatory environment for insurance to be better incorporated in risk management priorities and actions.

It will also work with the insurance industry to identify the financial protection needs of vulnerable groups such as women, farmers and businesses and facilitate the offer of customer-centric insurance products. UNDP will work more broadly with other development actors also pushing for financial resilience to further advocate and make the case for insurance as a key ingredient in managing shocks and fast-tracking recovery.

Japan and UNDP collaborate to advance Climate Smart Agriculture and build Resilient Communities in Jajarkot

Two types of polyhouses – a naturally ventilated and a nursery polyhouse with misting – were inaugurated by the Government of Japan and the United Nations Development Programme (UNDP), in Ward 7 of Nalgad Municipality, Karnali Province.

This area was among those affected by the earthquake in November 2023.

The multi-purpose nursery with misting will grow saplings of high value crops such as vegetables, fruit, forage, and fodder for community members. These polyhouses employ drip irrigation and mist irrigation which make optimum use of water, conserve water usage, decrease labour and increase agricultural productivity. The nursery will directly benefit 25 members of the farmers’ group and other local farmers in the community.

The naturally ventilated polyhouse demonstrates the benefits of climate smart agriculture interventions, enabling off-seasonal high value vegetable production.

In addition to this, the first five, out of 900, metallic improved cooking stoves and 6 orchard management tools were handed over to the local farmers, who are impacted by the earthquakes, to support their livelihood. Through ‘Enhancing Human Security Through Local Climate Action’ project 48 polyhouses have been supported, which will benefit over 40 households.

Addressing the handover event, deputy chief of mission of the Embassy of Japan Takahiro Tamura said, "I expect that the agricultural and energy equipment handed over today will be used for a long time by the people in this region, and I believe that this project will contribute to strengthening human security through a comprehensive approach that includes gender equality, disability, and social inclusion.”

Also expressing his condolences to all those affected by the earthquake, he elaborated, “I am heartened to hear that the capacity built through this project was very helpful during the Jajarkot earthquake response, as the trained volunteers were mobilised and helped to provide first aid, search and rescue and shelter support. Also, I am glad to know that the energy and agriculture support through this project is helping the communities to bounce back for better.”

He added that the project will further strengthen the relationship between Japan and Nepal as well as the friendship between people of the two countries.

Meanwhile, deputy resident representative of UNDP, Julien Chevillard, on the occasion,  said that considering the high vulnerability, Karnali is a priority province of UNDP, and a number of projects ranging from governance to earthquake preparedness and response are being implemented based on the Leave No One Behind principle. 

Thanking the Government of Japan, he added, "Through this partnership, we contribute to Nepal's ongoing efforts to mitigate the impact of climate change, rehabilitate post-earthquake, and enhance the livelihoods of the affected community."

Thanking the Government of Japan and UNDP, Mayor of Nalgad Municipality Dambar Bahadur Rawat, emphasised that agriculture is the primary livelihood for Nalgad residents, and the provision of agricultural equipment support has assisted the affected community in sustaining their livelihoods post-earthquake. "We seek further assistance in the second phase of this programme, which can offer technical and financial support for recovery and livelihood restoration.”

Chair of Barekot Rural Municipality, Bir Bahadur Giri, on the occasion, emphasised that climate change is a global concern, and here in Karnali Province, "we are among the first to feel its effects," he said, adding that it is crucial to empower community and raise awareness about the impacts of climate change, prompting local initiatives to mitigate these effects. "We deeply appreciate the support from the Government of Japan and UNDP during these challenging times and hope for continued collaboration in the future."

In Nepal, Karnali province is among the most remote provinces in Nepal. The Human Development Index (HDI) for Jajarkot District, in Karnali Province, stands at 0.393, falling below the national average of 0.587.

Compounding these issues is the district’s vulnerability to natural hazard induced disasters, particularly floods and landslides induced by rainfall and earthquake posing additional threats to the well-being of its residents.

In October 2022, Karnali Province experienced a severe flood and landslide, resulting in numerous casualties. The impact of climate change is exacerbating the already challenging situation in Jajarkot after the earthquake. Disasters and poverty are mutually reinforcing, thus creating a cycle of vulnerability and disaster.

The joint field visit reaffirms the commitment of the Embassy of Japan and UNDP to fulfilling the Climate Promise, a shared commitment to accelerate climate action and achieve the goals of the Paris Agreement.

By investing in projects like this one, Japan and UNDP are working together to build climate-resilient communities and mitigate the adverse impacts of climate change.

The ‘Enhancing Human Security through Local Climate Action (EHSLCA)’ project, funded by the Government of Japan, aims to improve human security through local climate action. The project, from

March 2023 till December 2024, includes key components on energy solutions, adaptive agriculture, infrastructure for risk reduction, instrumentation for improving early warning and capacity building.

Through the project, over 40 community members were trained in search and rescue in the months of September/October 2023 in Nalgad Municipality and Barekot Rural Municipality, right before the earthquake of November 3. 

These trained volunteers provided crucial support in immediate response during the earthquake. Furthermore, the project is leveraged support to the earthquake affected communities – those affected by the Western Nepal Earthquake of November 3, 2023 - through energy solutions for early recovery in Jajarkot and West Rukum Districts.

Climate Promise supports 120 countries – including 40 least developed countries, 28 small island developing states, and 14 high emitters – to enhance their Nationally Determined Contributions under the global Paris Agreement. Delivered in collaboration with a wide variety of partners, it is the world’s largest offer of support for the enhancement of climate pledges.

Nepal improves ranking in human development index

Nepal's Human Development Index (HDI) value is 0.601 —placing the country in the medium human development category and  —positioning it at 146 out of 193 countries and territories. 

Nepal’s ranking was 149 in 2021, according to United Nations Development Programme (UNDP) report. "As compared to 2021, Nepal’s progress on HDI value is 0.010 which is higher than global average of 0.004."

Countries with HDI values between 0.550 and 0.699 fall under the medium human development category.

Between 1990 and 2022, Nepal's HDI value changed from 0.395 to 0.601, representing a change of 52.2 percent. During the same period, Nepal's life expectancy at birth increased by 15.7 years, expected years of schooling by 5.4 years, and mean years of schooling by 2.1 years.

Nepal's GNI per capita changed by about 165.7 per cent between 1990 and 2022, the report adds.

The 2022 female HDI value for Nepal is 0.562, contrasting with 0.635 for males, resulting in a GDI value of 0.885.

Between 1990 and 2022, Nepal's life expectancy at birth changed by 15.7 years, expected years of schooling changed by 5.4 years and mean years of schooling changed by 2.1 years.

The 2022 female HDI value for Nepal is 0.562 in contrast with 0.635 for males, resulting in a GDI value of 0.885.

“Nepal performed progressively in the last 5 decades, yet fall into gridlock at times, particularly following the pandemic– be it related to decent jobs for youths, spatial and social inequalities, economic growth, as well as trust on institutions," UNDP Nepal’s Resident Representative Ayshanie Medagangoda-Labé said, adding that it is fundamental to collaborate not only between three levels of governments, but also with the private sector, civil society, international community, and people at large. "The federal government could focus more on transparency, accountability, and integrity; provincial and local governments can enhance planning and service delivery; Civil Society Organisations (CSOs) could further promote people’s participation and voice to revive hope and trust, and using multilateralism, a proven path that benefit everyone in the society.”

The report argues that advancing international collective action is hindered by an emerging ‘democracy paradox’: while 9 in 10 people worldwide endorse democracy, over half of global survey respondents express support for leaders that may undermine it by bypassing fundamental rules of the democratic process, as per data analysed in the report. "Half of people surveyed worldwide report having no or limited control over their lives, and over two-thirds believe they have little influence on their government’s decisions."

Political polarisation is also a growing concern with global repercussions. Along with a sense of powerlessness, report authors say, it is fuelling inward-turning policy approaches – starkly at odds with the global cooperation needed to address urgent issues like the decarbonisation of our economies, misuse of digital technologies, and conflict. This is particularly alarming in light of 2023's record-breaking temperatures, which emphasise the immediate need for united action to tackle the climate crisis, or in the advent of artificial intelligence as a new and fast-evolving technological frontier with little or no regulatory guard rails.

The report highlights that deglobalisation is neither feasible nor realistic in today’s world and that economic interdependence remains high. It points out that no region is close to self-sufficiency, as all rely on imports from other regions of 25 per cent or more of at least one major type of goods and services.

The report emphasises how global interdependence is being reconfigured and calls for a new generation of global public goods. It proposes four areas for immediate action:

- planetary public goods, for climate stability, as we confront the unprecedented challenges of the Anthropocene;

- digital global public goods, for greater equity in harnessing new technologies for equitable human development;

- new and expanded financial mechanisms, including a novel track in international cooperation that complements humanitarian assistance and traditional development aid to low-income countries; and

- dialling down political polarization through new governance approaches focused on enhancing people's voices in deliberation and tackling misinformation.

In this context, multilateralism plays a fundamental role, the report argues, because bilateral engagements are not able to address the irreducibly planetary nature of the provision of global public goods.

More key data from the report

• In 2023, all 38 countries that are members of the Organisation for Economic Co-operation and Development (OECD) achieved higher Human Development Index (HDI) scores compared to their levels in 2019.

• Among the 35 least developed countries (LDCs) that experienced a decline in their HDI in 2020 and/or 2021, more than half (18 countries) have not yet recovered to their human development levels of 2019.

• All developing regions have not met their anticipated HDI levels based on the trend before 2019. It appears they have shifted to a lower HDI trajectory, indicating potential permanent setbacks in future human development progress.

• The impact of human development losses is in sharp focus in Afghanistan and Ukraine.

Afghanistan’s HDI has been knocked back by a staggering ten years, while Ukraine’s HDI dropped to its lowest level since 2004.

• The report cites research indicating that countries with populist governments have lower GDP- growth rates. Fifteen years after a populist government assumes office, the GDP per capita is found to be 10 percent lower than it might under a non-populist government scenario.

Rich countries attain record human development, but half of the poorest have gone backwards

Uneven development progress is leaving the poorest behind, exacerbating inequality, and stoking political polarisation on a global scale. The result is a dangerous gridlock that must be urgently tackled through collective action, according to a new report released today by the United Nations Development Programme (UNDP).

The 2023-24 Human Development Report (HDR), titled 'Breaking the Gridlock: Reimagining cooperation in a polarised world', reveals a troubling trend: the rebound in the global Human Development Index (HDI) – a summary measure reflecting a country’s Gross National Income (GNI) per capita, education, and life expectancy – has been partial, incomplete, and unequal.

The HDI is projected to reach record highs in 2023 after steep declines during 2020 and 2021. But this progress is deeply uneven. Rich countries are experiencing record-high levels of human development while half of the world’s poorest countries remain below their pre-crisis level of progress.

Global inequalities are compounded by substantial economic concentration. As referenced in the report, almost 40 per cent of global trade in goods is concentrated in three or fewer countries; and in 2021 the market capitalisation of each of the three largest tech companies in the world surpassed the Gross Domestic Product (GDP) of more than 90 per cent of countries that year.

“The widening human development gap revealed by the report shows that the two-decade trend of steadily reducing inequalities between wealthy and poor nations is now in reverse," head of the UN Development Programme Achim Steiner said, "Despite our deeply interconnected global societies, we are falling short. We must leverage our interdependence as well as our capacities to address our shared and existential challenges and ensure people’s aspirations are met."

“This gridlock carries a significant human toll, he said, adding that the failure of collective action to advance action on climate change, digitalisation or poverty and inequality not only hinders human development but also worsens polarisation and further erodes trust in people and institutions worldwide.

The report argues that advancing international collective action is hindered by an emerging ‘democracy paradox’: while 9 in 10 people worldwide endorse democracy, over half of global survey respondents express support for leaders that may undermine it by bypassing fundamental rules of the democratic process, as per data analysed in the report. Half of people surveyed worldwide report having no or limited control over their lives, and over two-thirds believe they have little influence on their government’s decisions.

Political polarisation is also a growing concern with global repercussions. Along with a sense of powerlessness, report authors say, it is fuelling inward-turning policy approaches – starkly at odds with the global cooperation needed to address urgent issues like the decarbonisation of our economies, misuse of digital technologies, and conflict. This is particularly alarming in light of 2023's record-breaking temperatures, which emphasise the immediate need for united action to tackle the climate crisis, or in the advent of artificial intelligence as a new and fast-evolving technological frontier with little or no regulatory guard rails.

The report highlights that deglobalisation is neither feasible nor realistic in today’s world and that economic interdependence remains high. It points out that no region is close to self-sufficiency, as all rely on imports from other regions of 25 per cent or more of at least one major type of goods and services.

"In a world marked by increasing polarization and division, neglecting to invest in each other poses a serious threat to our wellbeing and security," Steiner said, adding that protectionist approaches cannot address the complex, interconnected challenges we face, including pandemic prevention, climate change, and digital regulation. "Our problems are intertwined, requiring equally interconnected solutions. By adopting an opportunity-driven agenda that emphasises the benefits of the energy transition and of artificial intelligence for human development, we have a chance to break through the current deadlock and reignite a commitment to a shared future."

The report emphasises how global interdependence is being reconfigured and calls for a new generation of global public goods. It proposes four areas for immediate action:

- planetary public goods, for climate stability, as we confront the unprecedented challenges of the Anthropocene;

- digital global public goods, for greater equity in harnessing new technologies for equitable human development;

- new and expanded financial mechanisms, including a novel track in international cooperation that complements humanitarian assistance and traditional development aid to low-income countries; and

- dialling down political polarisation through new governance approaches focused on enhancing people's voices in deliberation and tackling misinformation.

In this context, multilateralism plays a fundamental role, the report argues, because bilateral engagements are not able to address the irreducibly planetary nature of the provision of global public goods.