Government utilised less than half of loan pledges

- RAJESH KHANAL, Kathmandu

Mar 9, 2019-

The government was able to utilise less than half of the loan commitments made by the Asian Development Bank in 2018 due to the poor capacity of all its three tiers, said the Nepal Portfolio Performance Review 2018 unveiled by the multilateral lending institution on Friday.

The country used $246.7 million, or 41.6 percent, of the loan commitments totalling $592 million made by the bank. Of the disbursed loans, most were utilised in transport and energy-related projects, the report said. Over the period, contracts worth $131.9 million were awarded to transport-related projects compared to the target of $157 million. Contracts valued at $95.1 million were awarded to energy-related projects, well short of the target of $160 million.

Asian Development Bank-funded projects achieved 86 percent progress in awarding contracts in 2018. Out of the target of $447 million, contracts worth $386 million were awarded. Nepal made notable achievement mainly in projects related to agriculture and natural resources, urban and water and education.

The bank’s portfolio performance in Nepal shows that the country’s capacity to award contracts and disbursement of funds has improved in recent years.

Diwesh Sharan, the bank’s deputy director general for South Asia, cited inadequate capacity of all three tiers of government as the main cause behind the slow utilisation of funds in development projects. Speaking at a country portfolio review meeting jointly organised by the Asian Development Bank and the Ministry of Finance, Sharan said, “Both central and sub-national level governments need to focus on improving their capacity for timely and successful project implementation.”

The Asian Development Bank had also pledged to provide $8.01 million in technical assistance and $5.31 million in co-financing. The bank pledged the assistance for transport, urban development and water supply, energy, rural roads, agriculture and natural resources projects.

Speaking at the programme, Asian Development Bank Country Director for Nepal Mukhtor Khamudkhanov said the performance of bank-assisted projects last year was reasonable.

“However, joint efforts are needed to improve project implementation in terms of both quality and time and substantially increase disbursement as a proxy for the project implementation progress,” he said.

Finance Secretary Rajan Khanal said that more work needed to be done to achieve the project implementation target. Khanal pointed to systemic issues like deputation of incompetent staff and poor management, among others, as being the main challenges in implementing projects.

Published: 09-03-2019 09:50

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