Nepal seeks immediate assistance from ADB

Nepal has requested Asian Development Bank (ADB) to provide immediate assistance amounting to $250 million.
Finance Minister Dr Yuba Raj Khatiwada – talking on phone – requested ADB president Masatsugu Asakawa today to support Nepal in its fight against the novel coronavirus disease (Covid-19) pandemic. Asakawa, on the occasion, commended Nepal’s decisive actions to control the spread of the virus and manage its impact on public health and the national economy, particularly through the government’s $1.26 billion comprehensive National Relief Programme.
Nepal’s response aims at strengthening the medical system capacity, lessening the economic strain on individuals, especially the poor and vulnerable, and supporting businesses, which have been severely affected by the economic slowdown, claimed the Finance Ministry that has directed the enterprises to pay the salary to the employees – also during the lockdown – of last month and waive rent of the tenets without understanding the ground reality. Most of the employers have borrowed to operate the business, whereas most of the house-owners have also borrowed to buy or construct their house.
“ADB is committed to supporting the government’s needs in these most challenging times,” Asakawa has been quoted in the press note of the Finance Ministry. “We are accelerating the processing of a quick budget support loan with affordable terms and conditions to respond to the government’s request for assistance in strengthening the health system and mitigating the economic and social impact of the Covid-19 pandemic.”
Thanking ADB for its support, Khatiwada reiterated the Nepal’s strong commitment to carry out immediate containment measures, social protection for the poor and vulnerable, and economic support for the affected sectors of the economy. The government has imposed lock down since last 36 days to contain the spread of pandemic that is causing disruptions in industry and services. Nepal is losing all the sources of foreign exchange as tourism has been hit hard due to suspension of international flights, remittance inflow has decelerated due to lock down in host countries and falling exports due to closure of industries and transportation have been hit hard.
ADB has a strong track record of responding rapidly to support Nepal in times of emergencies and has already provided a $300,000 grant to procure medical supplies, in close collaboration with UNICEF. The grant will finance urgently needed and critical personal protective equipment to enable medical personnel to safely treat infected patients. Additional grant resources are being explored for expanding supply of essential medical goods to combat the outbreak.
In close collaboration with other development partners, ADB is accelerating its efforts in providing further support to Nepal from the expanded Covid-19 response package of $20 billion announced on April 13, with approved measures to streamline its operations for quicker and more flexible delivery of assistance, the press note reads.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members, 49 from the region.

ADB introduces contingent disaster financing for natural disasters

The Asian Development Bank (ADB) has introduced a new financing mechanism – contingent disaster financing (CDF) – to support its developing member countries in strengthening disaster preparedness and provide quick-disbursing budget support following natural disasters.
“CDF will provide a quick and flexible source of funds for developing member countries affected by disasters until funds from other sources become available,” said the director general of ADB’s Strategy, Policy, and Partnerships Department Tomoyuki Kimura. “It will also help promote greater preparedness and risk management in developing member countries prone to disasters.”
Asia and the Pacific is the world’s most natural disaster-prone region. Between 2014 and 2017, countries in the region suffered 55 earthquakes, 217 storms and cyclones, and 236 cases of severe flooding, affecting 650 million people and causing about 33,000 deaths, according to the United Nations.
CDF – approved today by ADB’s Board of Directors – will cover disasters triggered by natural hazards like typhoons, floods, earthquakes, droughts, and tsunamis. A key feature of CDF is that it supports essential policy reforms to strengthen disaster preparedness that are to be completed before a natural disaster occurs. Once a CDF is approved for a country, it remains active until a disaster occurs. The country can then quickly access the approved financing to help relieve fiscal constraints for urgent relief and recovery efforts and avoid disruptive reallocations from priority budget programs.
“Where necessary, CDF disbursements can be accompanied by follow-up assistance through ADB’s other emergency or regular lending instruments to support recovery and reconstruction,” said Kimura.
The new financing supports Strategy 2030’s operational priority of tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. In 2018, it made commitments of new loans and grants amounting to $21.6 billion. Established in 1966, it is owned by 68 members, 49 from the region.

ADB supported Khurkot bridge to connect hills and Terai

The government today opened the Khurkot Bridge over the Sunkoshi River, substantially enhancing connectivity between hilly regions – particularly Ramechhap, Dolakha, and Sindhupalchowk districts – and  the Terai districts.

The bridge built with financial assistance from the Asian Development Bank (ADB) will also serve as an important link crossing the mid-hill highway and providing the shortest land route between the People’s Republic of China and India.

“Enhanced connectivity and mobility are vital for local economic development and poverty reduction,” said ADB’s country director for Nepal, Kenichi Yokoyama, after the inauguration of the bridge by the minister for Transport Bimalendra Nidhi.

“Khurkot Bridge will provide a vital lifeline to the people in the northern hilly terrains along the Sunkoshi River,” he said, adding that it will link them to essential services offered in other parts of the country, and open up a wide range of opportunities like high value agriculture, tourism, and trades. “It is truly a symbol of development.”

“Before the construction of the bridge, people and cargo had to first come to the capital city of Kathmandu and then travel to the Terai districts which was time consuming, costly, and cumbersome.

The seven meter bridge that was completed at a cost of $1.8 million has connected Ramechhap and Dolakha districts directly to Terai for the first time by road networks,” said project director in the Department of Roads Umeshananda Misra.
The $55.2 million Roads Connectivity Sector I Project, of which the Khurkot Bridge is a part, is being completed in 12 districts. A total of 318-km of strategic roads have been upgraded to fair weather standards under the project. Three district headquarters have been connected to all weather roads for the first time, including Dhunche of Rasuwa, Manthali of Ramechhap, and Taplejung of Taplejung districts.
The main objective of the project is to reduce the isolation of remote rural communities, mostly in hilly regions by enhancing access of the isolated and disadvantaged population to the basic services and employment opportunities.

With improved connectivity, they will have easier access to health and education in major towns and district headquarters. Improved connectivity will also substantially reduce the price of basic consumer goods while enhancing the farm gate prices of agriculture products in large areas adjacent to the roads. The project is also helping to increase awareness about HIV/AIDs and anti-trafficking.

ADB approves new strategy‚ pledges $1.5 billion for five years

Asian Development Bank (ADB) has approved a new Country Partnership Strategy with Nepal that will anchor the multilateral development partner assistance to the country over the next five years, focusing mainly on energy and infrastructure.

ADB will extend long-term public and private sector finance for capital investment in the areas of transport, energy, water, and other basic public services like education and skills development; investments that will ensure poverty reduction, as well as inclusive and sustainable growth, it said.

The funding is expected to be just under $1.5 billion over the next five years. It expects to raise double this amount from other partners from both the private and public sectors, if the country increases its spending capacity.

ADB’s five-year strategy will tackle these critical constraints through high priority energy sector investments to strengthen domestic energy security and promote exports through public-private partnerships. Integrating Nepal with the regional and world economy by expanding its airports and trans-boundary road networks and modernising customs will also be a focus of ADB’s assistance.

Improving urban infrastructure like water supply and sanitation in centres such as Kathmandu is another critical activity. ADB will also help with irrigation and watershed improvement to boost productivity and commercialisation. Meanwhile, ADB’s education programme will target schools, higher education, and vocational and technical skills training.

The new strategy also places significant focus on governance, financial management, climate change, reforms for private sector investment and sustainability, institutional development and better project implementation performance but will have the flexibility to respond to emerging needs in the business environment during the political transition.
“The government and ADB worked very closely together to define a strategic framework that will allow ADB and others to join up in funding the type of investments that can transform Nepal," said director general of ADB’s South Asia Department Juan Miranda.

The strategic work was done in close consultation with key public agencies and private enterprises, as well as with civil society and other development partners, he said, adding that the ADB and government now need to convert it into projects that ensure value for money and deliver development effectiveness.
Nepal, which will hold Constituent Assembly (CA) elections next month following a period of political transition after the end of armed conflict in 2006, has great potential to scale up hydropower development, tourism, and agriculture, and to benefit from its strategic location between the People’s Republic of China and India.
However, impediments like critical power shortages, poor connectivity and water supply, and weaknesses in its human capital base, investment, and governance are undermining that potential.
“However, the periodic strategy will tackle these critical constraints through high priority energy sector investments to strengthen domestic energy security and promote exports through public-private partnerships,” the ADB added.

The previous country partnership strategy (2010-2012) had focused on inclusive economic growth, inclusive social development, governance and capacity building, and climate change adaptation and environmental sustainability.

Power swaps can help Asia-Pacific manage daunting future energy needs: ADB Report

Cross-border power exchanges can play a central role in helping Asia and the Pacific meet its booming demand for power, which is set to sharply outpace the rest of the world’s over the next two decades, according to a comprehensive new report from the Asian Development Bank (ADB).

“Our projections show the region will consume more than half the world’s energy supply by 2035, with electricity consumption more than doubling as economic growth and rising affluence drive demand,” special senior advisor of the Infrastructure and Public-Private Partnerships at ADB said S Chander.

“Countries cannot meet these huge power requirements all on their own, so the region must accelerate cross-border interconnection of electricity and gas grids to improve efficiencies, cut costs, and take advantage of surplus energy,” he added.

The ‘Energy Outlook for Asia and the Pacific’ report provides in-depth data and projections on energy use at the sub-region, country, and sector levels until 2035, along with an analysis of the impacts of a ‘business as usual’ approach to power, and an alternative approach in which countries scale up efficiencies and low carbon technologies.

Fossil fuels will continue to dominate the energy mix in the coming decades, with the demand for coal set to rise by more than 50 per cent over the outlook period, or nearly two per cent a year, led by consumption in the People’s Republic of China and a pickup in use in Southeast Asia as countries look for low cost options to diversify existing supply sources.
Oil demand will also grow by two per cent a year, led by the transport sector, with newly affluent South Asians buying an increasing number of motor vehicles. Natural gas demand will expand at the fastest annual pace of four per cent because of the lower environmental burden and ease of use.

The reliance on fossil fuels presents major pricing, energy security, and environmental challenges, with Asia and the Pacific’s carbon dioxide emissions set to double by 2035, making up more than half the world’s total output. Without reducing its heavy reliance on oil imports, using power more efficiently, and adopting more green energy options, the region will see a growing energy divide between the rich and poor, and increasing threats from climate change.

Using a mix of efficiency measures, advanced generation technologies, and greater use of renewable power could almost halve the projected annual rise in energy demand through to 2035. More efficient oil refining and gas processing, along with a reduction in demand for electricity, offer the bulk of the energy savings potential.

There are big opportunities for building on existing cross-border power exchange initiatives in Southeast Asia, South Asia, and Central Asia, with the ultimate goal of establishing a pan-Asia energy market by 2030. Closer cooperation will have other positive spinoffs including new economic opportunities and warmer relations.

Meeting the region’s energy needs will come at a hefty cost with estimates the sector will require new investments of about $11.7 trillion through to 2035, based on business-as-usual power use patterns.
The investments swell to about $19.9 trillion under the alternative approach because of the adoption of pricey advanced coal and natural gas fired generation technologies, and low carbon options like wind and solar energy. Finding ways of removing current regulatory barriers are crucial for the broader use of renewable energy.

The report was prepared by a team from the Asia Pacific Energy Research Center of the Institute of Energy Economics, Japan, under an ADB regional technical assistance project.

Asia cannot bypass manufacturing on path to prosperity: ADB Report

Industrialisation must be an essential part of the growth formula, if Asian countries want to prosper and avoid the middle income trap, according to a new Asian Development Bank (ADB) report.

In a special chapter of Key Indicators for Asia and the Pacific 2013, its flagship annual statistical publication, ADB emphasises that manufacturing is essential to a high productivity service sector, technological innovation, and modernising agriculture.

“Historically, no economy has reached high income status without reaching at least 18 per cent share of manufacturing in output and employment for a sustained period,” said ADB’s chief economist Changyong Rhee.

The report noted that one group of economies — Hong Kong, China; Japan; the Republic of Korea; Singapore; and Taipei, China — rapidly industrialised to become high income countries, while another group of economies, including the People’s Republic of China (PRC), Malaysia, and Thailand, are transforming more slowly.

Other developing Asian nations – like Bangladesh, India, Pakistan or the Philippines are changing even more slowly – have created few manufacturing jobs, and are shifting from agriculture into services.

“Right now, as services boom in the region, it’s tempting to shun industrialisation, but it will be a serious mistake if a country wants to be prosperous,” Rhee added.

Industry does not lead the way in Asia, the report noted. Services are the largest share of developing Asia’s output and agriculture remains the largest employer, providing an income for 700 million people.

Regional diversity means Asia’s economies require different policy priorities to promote transformation. Modernising the agricultural sector is a key task in developing Asia, in particular for low income countries.

For middle income economies heavily dependent on labour-intensive sectors or currently bypassing industrialisation, the focus should be on upgrading their industrial base. For these nations, good quality education is essential for industrial diversification and reducing the path-dependency nature of structural transformation.

For small island economies, industrialisation may not be cost effective, and the future lies in becoming competitive in certain service sector niche markets.

Key Indicators for Asia and the Pacific 2013 also charts regional progress in achieving the Millennium Development Goals (MDGs). It notes that two years before the MDG deadline in 2015, most of the region has made significant progress in reducing poverty, improving access to universal primary education, and promoting gender equity and women's empowerment.

The special supplement, A Framework of Inclusive Growth Indicators, finds that progress toward more inclusive growth has been positive in the 1990s and 2000s on most indicators for the majority of developing economies in Asia.

Challenge for Asia to maintain growth momentum: ADB

Continued tepid demand from the major industrial economies coupled with slower growth in the People’s Republic of China (PRC) are weighing on the outlook for developing Asia, says a new Asian Development Bank (ADB) report.

The latest Asian Development Outlook Supplement released today trimmed the 2013 growth forecast for the 45 developing member countries of ADB to 6.3 per cent and cut its 2014 forecast to 6.4 per cent. In April, ADB had predicted the region to grow 6.6 per cent this year and 6.7 per cent next year.

“The drop in trade and scaling back of investment are part of a more balanced growth path for PRC, and the knock-on effect of its slower pace is definitely a concern for the region. But we are also seeing more subdued activity across much of developing Asia,” said ADB chief economist Changyong Rhee.

The PRC - home to developing Asia’s largest economy - is likely to see its economy expand by 7.7 per cent this year and 7.5 per cent in 2014 after growth of 7.8 per cent in 2012. The report notes that import and export growth has slowed given weak external demand, but notes continuing robust consumer confidence. Slower growth in the PRC has subdued the outlook for the entire East Asia region, as well as, to a lesser extent, for Southeast Asia, where the Philippines and other large ASEAN countries are otherwise seeing solid growth.

In India, meanwhile, slow progress in pushing through the reforms needed to ease business bottlenecks means growth is likely to be 5.8 per cent this year, slower than the previously forecast six per cent.
ADB maintains its 2014 forecast of 6.5 per cent for 2014. Elsewhere in South Asia, Sri Lanka continues to grow strongly while other parts of the region will see softer than anticipated growth.

The report has also trimmed forecasts for Central Asia, reflecting the sluggish economic performance of Kazakhstan and Georgia, and for the Pacific where Timor-Leste is seeing a slowdown in government spending.

Inflation pressures, meanwhile, are waning on the back of declining energy and food prices, given slower global demand for fuels and bumper grain harvests.