Nepal has been passing through a series of political turmoil and lately parties have agreed to form an election government led by chief justice. How do you comment on the development?
Despite the political upheavals that Nepal has passed through over the past four years, I feel that everybody is hopeful. Most of the political leaders that I met and hopeful that the latest political arrangement will take the country out of the transition and will allow it to focus once again on development. Nepal has made tangible achievements in the social sector over the last 50 years. But growth story has been slightly pessimistic mainly due to political instability. If the latest political arrangements work to hold elections and Nepal achieves political stability, I am hopeful that the growth will accelerate.
Nepal and the World Bank have been celebrating 50 years of partnership. In your opinion, what have been the major achievements and failures in terms of development outcomes of Nepal?
First of all I would like to recapture the history of our partnership. In the initial phase, both Nepal and the World Bank focused on developing infrastructure, including the power sector. Then we moved to the social sector development in a big way, which, I think, produced wonderful results. For example a child born today can expect to live 25 years longer than a child born in 1970. Similar achievements have been made in literacy rate and gender parity. Moreover, today more than 80 percent of the rural population has access to clean water and half of the total population has access to sanitation. Extreme poverty has been halved in just seven years. Child malnutrition, however, is still an issue.
As far as the failures are concerned, with such a huge potential Nepal could have done much in power development not only to fulfill its domestic needs but also for export purpose. Nepal´s poor connectivity with other countries is still a concern. Similarly, poor governance mainly due to absence of strong institutions continued to be a big problem which is breeding corruption and instigating extortion.
In your speech commemorating 50 years of development partnership with Nepal, you expressed concern over poor expenditure and rising corruption. Would you please elaborate your concern?
We are having problems in disbursement due to lack of a full-fledged budget this year. We are worried that without disbursement there will be no development as it is a necessity but not sufficient condition for development. As a result, the capital expenditure has not been able to rise which is also a loss in terms of development. So we have said that expenditure needs to be increased in order to stimulate growth and development. As far as corruption is concerned, I have noted that political leaders, civil society members and the private sector agree that extortion and corruption is a major concern. As everybody agrees on the issue, I think the country has a strong consensus to tackle it. Again I say that there is a need for strong institutions to deal with the issues and I am hopeful that Nepal will take steps toward strengthening accountability institution.
Power crisis has been major obstacles to economic development in Nepal. Is the World Bank planning to extend support for development of this sector?
Yes, we have a program with different components to support power sector development in Nepal. One is the construction of transmission lines from India to Nepal. This will immediately increase power supply to Nepal. But we feel developing Nepal´s own vast resources is much more important and for that we are working with the Nepal Electricity Authority (NEA). But weak financial health of NEA mainly due to loss of around 2 cents per unit in power trade is a problem. This is repelling investment in the sector. We are also working with the Investment Board for the development of bigger projects.
There have been a lot of talks about the ongoing reforms at the World Bank. How do you think a small and underdeveloped country like Nepal can get benefits from such reform initiatives?
The new president Jim Yong Kim has reiterated our mission to fight poverty. He has talked a lot about bending the arc of poverty which means there is the possibility of eliminating extreme poverty from the world in the next 15-20 years. We have seen a historic decline in poverty over the last 15-20 years mainly because of China and we hope that it will continue at a higher pace. Nepal will be a part of that mission and we believe Nepal has that potential as it has shown in the past.
So, what impression you are taking back to Washington DC?
I am hopeful that the latest arrangement will unlock the political impasse to hold election which we expect will open the way for our next Country Assistance Strategy that is going to be for 4-5 years rather than 1-2 years. I am hopeful of a prosperous future for the country.
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