Nepal could lose ADB aid worth USD 90 million: Official

Published: 26th September 2013 07:35 PM  |   Last Updated: 26th September 2013 07:35 PM   |  A+A-

Nepal could lose aid from the ADB worth USD 90 million if it fails to address issues related to fiscal discipline and delays in implementing projects, a top official said on Thursday.

"Nepal will lose USD 90 million financial assistance from the Asian Development Bank in the next two years if we fail to address issues relating to slow disbursement, financial discipline and delay in implementing ADB-funded projects," Finance Secretary Shanta Raj Subedi said.

The government is taking this issue seriously and discussions have started with key officials in concerned ministries to address the matter, Subedi said in his opening remarks at a review meeting organised here by the Manila-based ADB.

The overall performance rating of Nepal's portfolio in fiscal 2013 was 3.0, against the maximum scale of 5.0, said Kenichi Yokoyama, ADB's country director.

Nepal's allocation from the ADB could be increased by USD 45 million a year, from the current level of USD 227 million, if the country can achieve a rating of 4.5, he pointed out.

Last year, ADB provided around USD 400 million US dollar as financial aid to Nepal, of which USD 45 million was in the form of grant assistance.

Progress in ADB-aided projects slowed down last year mainly due to slippages in two major schemes - the USD 35 million school sector programme and USD 30 million tunnel construction of the Melamchi Drinking Water Project.

ADB had to cancel the 27-km tunnel project being implemented by a Chinese contractor after the company failed to make adequate progress in the scheme meant for supplying drinking water to Kathmandu Valley.

"We still need to face enormous challenges in terms of improving portfolio performance...This may be further complicated by  the remaining challenges to complete political transition process," Yokoyama said.

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