KHATMANDU: The Ministry of Finance today signed an agreement with the World Bank Group (WBG) to obtain development policy credit worth $100 million from the WBG.
The government of Nepal has been receiving such budgetary support from the World Bank through the Development Policy Credit (DPC) window to implement policy reforms in the financial sector, which is critical to enhance economic growth and for sound financial governance.
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This assistance will be in the form of budgetary support and received in the national treasury in a single tranche and government could use the assistance in accordance to its needs and priority areas. The government has utilised such credit facility twice earlier — $30 million in the first phase in 2013 and $100 million in 2015. On such a credit, WB charges 0.5 per cent fee for non-utilisation of the funds but the credit remains interest-free.
The objective of the assistance is to help step up Nepal’s medium-term reform programme for the stability of the financial sector and to reduce the vulnerability of the banking system and to increase its transparency, according to the Ministry of Finance.
“The third series of the DPC will be utilised for enhancing financial sector development, restructuring and consolidating the financial system, strengthening the legal and regulatory framework and enhancing governance and transparency of the banking sector.” The agreement was signed and exchanged between Finance Secretary Shanta Raj Subedi and Qumiao Fan, country director to Nepal of the World Bank Group.
Speaking during the agreement signing ceremony, Qumiao from the WBG suggested the government to create an environment for a vibrant private sector, which is vital for financial sector. He also expressed hope that the government will better utilise the assistance provided by WBG.
Finance Secretary Subedi talked about the reform measures taken for the stability of the financial sector and recently issued numerous laws to strengthen financial sector development and regulatory capacity enhancement of Nepal Rastra Bank.
Subedi further said that the government has also given top priority to strengthen insurance sector and electronic payment system.
