Although Ministry of Finance (MoF) says downsizing of the WB office and absence of the bank´s country director will not have strong bearing on its aid and technical assistance to Nepal, officials said it will impact overall aid operations due to various reasons.[break]
First, the country director in Nepal used to enjoy direct communication with the regional vice-president and the board. But in its absence, the new office will have to communicate via Dhaka office -- meaning the channel of communication will be longer and, therefore, Nepal´s needs would no longer be viewed with the same urgency as in the past.
The WB has been functioning as lead donor agency, coordinating with different bilateral and multilateral donors for aid alignment and harmonization on areas of Nepal´s priority.
As the new change will weaken the presence of the WB itself, experts said it will weaken the local donor coordination mechanism as well.
Another crucial point experts worry about is: presence of the WB´s full-fledged structure so far has been serving as a strong point for Nepal to lure number of international donor agencies. “There are number of donors that look at WB´s supervision and policy direction while deciding their own assistance. The new change will weaken confidence of such donors,” said Rameshwore Prasad Khanal, former Finance Secretary.
Sources said it could mainly affect the flow of additional aid, particularly grants.
Keshav Acharya, chief economic advisor at the Ministry of Finance (MoF), however, opined differently. “The WB will still have a country manager to lead its operations here. And given that the multilateral donor provides aid on the basis of its 3-year Country Assistance Strategy (CAS), the change in structure will not affect its priority and assistance to Nepal,” he said. Under CAS, the WB is providing assistance to Nepal in the range of US$ 120 million to US$ 300 million a year.
“It is true, but only partially,” said former Finance Secretary Khanal. “We are presently receiving WB assistance of US$ 738 million, which is far above what CAS provisions. Would it have been possible if there was no country director here?” he added.
But despite such risks, officials said that the chance of WB withdrawing its decision was very slim.
“We had requested the WB to reconsider its decision for Nepal, particularly citing the political transition and the kinds of support Nepal would need in coming days during state restructuring,” said Acharya. However, WB Vice President for South Asia Isabel Guerrero, who was in Nepal in March, had ruled out such a possibility, referring that the change pushed by the management was already endorsed by the bank´s board. Besides, the new decision is already implemented in African and Latin American countries.
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