Nepal could lose $100m in potential ADB aid

KATHMANDU, AUG 15 -

Nepal’s poor spending pattern could result in its losing around $100 million from potential Asian Development Bank (ADB) aid during the biannual period of 2017-18, the multilateral donor agency said Friday.

Nepal could get around $300-400 million per year during the two years, but could lose a significant amount to other better performing countries if its performance does not improve, the ADB said. The bank will be substantially increasing annual concessional lending by 70 percent starting from 2017 which means Nepal could get a maximum of $400 million.

“Nepal can also benefit, but it needs to improve its portfolio performance,” said ADB Country Director for Nepal Kenichi Yokoyama. According to the ADB, only $25 million has been disbursed out of the planned $180 million for 2015 with just four months remaining for the year to end.

According to the multilateral donor agency, around $50 million is in the final phase of disbursement, which means disbursement could reach $75 million by year-end. “There should be a significant improvement in the current disbursement level. Otherwise, there is a chance that Nepal could lose a potential rise in ADB aid,” said Yokoyama.  ADB officials said that the Asian lender had already sent a strong message to the government about what could happen if performance did not improve. “Headquarters has been asking us why the portfolio for Nepal should be increased when the existing resources are not being spent,” said an ADB official. “It is a difficult question we have to deal with.” As per the ADB, Nepal has not contracted a large portion of the portfolio equivalent to $1.09 billion while as much as $1.42 billion remained to be disbursed as of June-end this year. The figures represent 56 percent and 73 percent of the ADB’s total portfolio of $1.95 billion respectively.  

Last  month, ADB Director General Hun Kim had given similar warming at the Tripartite Portfolio Review Meeting organised in the Capital. “ADB resources are allocated competitively based on the country’s portfolio performance,” Kim said, adding that Nepal needed this resource most for its development endeavour. “So, it is very important for us to improve the performance.”

According to the Asian lender, it has observed the poorest record in energy projects with the disbursement recorded at just 6 percent. According to the ADB, the energy sector has been allocated a whopping $1 billion including co-financing from other development partners.

According to Yokoyama, transport related projects are also not performing satisfactorily. Only the agriculture sector, which includes rural agriculture roads, has been doing well. “There should be massive improvement in big infrastructure projects,” said Yokoyama.  

According to the ADB, the much delayed Melamchi Water Supply Project is certain to get delayed further due to recent earthquakes and landslides which have made it difficult for the contractor to restart work. “It is likely to be pushed back by six months at least,” said an ADB official. 

Source: The Kathmandu Post