ADB expects 3.5 percent growth in Nepal

REPUBLICA, 5-Feb-09

The country director of the Nepal Resident Mission of Asian Development Bank (ADB) Barry J. Hitchcock said despite the global down turn, Nepal will see a 3.5 percent growth rate this year.

“Given the economic performance of Nepal, we have expected that Nepal’s economic growth would hover around 3.5 percent this year. However, the growth depends on what will happen in the agriculture sector, the main stay of Nepal’s economy,” said Hitchcock, while delivering a statement about the ADB-financed projects during 2008 at a press conference on Thursday.

Answering queries about future assistance to Nepal, Hitchcock said that the ADB would double the volume of its assistance to more than US$ 200 million each year in the next two years, including 2009, where the ration of grant and loan will be equal.

“However, the future assistance will be based on the performance of Nepal in implementing the development programs,” Hitchcock said.

The ADB had approved the grant assistance of US$ 8 million and US$25 million for the education sector, and information and communication development.

A grant of US$ 106.3 million was approved for the development of local governance and community development.

The ADB office’s mission statement issued during the press conference stated the portfolio for Dec 31, 2008 comprised of 18 loans worth US$586 million net, 10 investment grants worth US$ 332 million, and 33 ongoing technical assistance projects totaling US$ 29 million.

The ADB’s contract awards and disbursement to Nepal reached US$145 million and US$127 million, respectively.

Hitchcock painted the encouraging picture based on the assistance modality in different projects in Nepal.

“The year 2008 was a good year for the ADB in term of assistance, as all of our assistance for investments projects are in the form of grants,” said Hitchcock.

The ADB statement said no projects were considered at risk at the end of 2008, a remarkable achievement compared with 14 percent in 2007 and 17 percent in 2006.

The resident representative also categorically mentioned that the price increase for construction materials in high fuel prices delayed approval of government budget and Koshi flooding were the major challenges in development works during the review year.

“Now, shortage of electricity has emerged as a major change, as in the absence of electricity we cannot think of desirable economic activities,” Hitchcock said.

He also said that the ADB would take the initiative to fund more hydropower projects to deal with the ever-increasing power shortage in the country.

“We are looking for the possibility of funding storage project to solve the problem of the power crunch during the winter when water level in the rivers recedes,” he added.

He also noted that the successful completion of the CA election in April has paved the way for the establishment of lasting peace and enhanced prospects for sustainable growth in Nepal.