"Nepal urgently need long-term development vision"

Isabel M Guerrero, is the Vice President for the South Asia Region of the World Bank, Nepal´s largest multilateral development partner. She joined World Bank in 1982 and has worked as the country director for Bolivia, Ecuador, Paraguay, Peru, Colombia, Mexico and most recently India. A national of Chile, Guerrero holds an M.Sc degree in Economics from the London School of Economics and Political Science (1981) and is a Psychoanalyst trained in the Washington Psychoanalytic Institute. Prem Khanal of Republica talked with Guerrero, who concluded weeklong visit to Nepal, on Sunday. Excerpts.

What were your general impressions during this visit?

When I landed in Kathmandu and had preliminary discussions, frankly I was not very excited. But when I visited the western hilly region to see some World Bank supported projects, my initial impressions completely changed because of the massive changes that are taking place at the community level. One can see real changes taking place in people´s lives mainly because of their increased access to basic services like power and irrigation. I was really impressed with the changes that a micro-hydro project has brought to local areas. There is now X-ray facility at the local hospital and we saw a carpenter using machines to increase his production. We also met with representatives of private sector who were confident of making money and were willing to invest more but were equally worried about the lingering political uncertainty.

What is your impression on a number of high-level meetings with the officials, including the Prime Minister, and what are the areas of future cooperation?

During my meeting, I told the Prime Minister that the World Bank is a long-term development partner of Nepal and the Prime Minister talked about a number of priorities he has for the country. First is hydropower, not only because the country is facing power shortage but also because it is one the main potentials that Nepal has. We also had talks with the Minister of Energy on the issue and I think we have covered some grounds for future cooperation. Mid-Hill Highway Project that aims to connect eastern and western part of Nepal was another priority that we talked about. And the third one is Regional Integration Possibilities with India, which will build strong business links between Nepal and India.

Given the current energy crisis that Nepal is facing, I think hydropower is the sector where we expect to work more closely with Nepal. Given the fact that Nepal is incredibly rich in community participation, community driven projects will be another area where a great opportunity of future cooperation lies. Community managed schools that we visited were some successful examples of community participation.

What is your observation about ongoing financial sector reform?

The government is taking measures to ensure the successful implementation of the financial sector reform. We have seen progresses both at Nepal Bank Limited and Rastriya Banijya Bank in terms of their non-performing assets. There are processes going on to hire new managers to continue the reforms. And we will continue to support the financial sector reform in Nepal. But at the same time, it is worrisome that the government has not been able to appoint a governor at the central bank which is the focal point that handles delicate financial sector reforms and implementation of monetary policy.

There were some problems in implementation of World Bank funded Emergency Peace Support project. What is its current status?

Yes, there were some problems and we are in the process of restructuring the implementation modalities of the project. We are entering into a new agreement with Ministry of Peace and Reconstruction that will ensure more concrete support in terms of new training and income generation opportunities for those affected by the conflict. What I want to stress is that the World Bank will continue to support Nepal´s peace process because it is the most important thing for Nepal.

Can you please highlight major strategies that World Bank has adopted for hydropower development in Nepal?

We have a four-prong approach for the hydropower power sector development in Nepal. The first one is to address the immediate shortage of power of Nepal and we are working with the government on how we can address the problem. The second one is the expansion of micro hydro projects since these are not expensive and are quick to construct, and they do bring a big transformation in the villages. The third area we are looking at is support for medium range hydropower projects and associated transmission lines. We are already working on finalizing the Kabeli A hydropower project, and we are expecting the project to be tabled to the board of the World Bank by December. Once it comes into operation, we will think of our engagement in some of the larger projects that we have been offered by the government.

What are opportunities and challenges for Nepal´s economy?

Nepal has a huge opportunity. First, it lies between India and China, which are the two fastest growing economies. But Nepal needs to have a concrete strategy to reap benefits from the economic opportunities that the two countries can bring about here. The second one is that Nepal has a huge tourism opportunity particularly there is a great prospect of attracting Chinese and Indian tourists. Nepal can also attract foreign direct investment to boost its economic activities but for that there is a need of sustainable peace and stability. As far as challenges are concerned, I think there is a need of a vision as a nation where you want to go and I think political leaders should work together to have a common long-term vision that ensures prosperity for the country. The future course should also contemplate on how you can get benefits from the resources that you have.