FINANCEFINANCE NEWS AND VIEWS Nepal Donors Consultation Meeting- 2008, Special Issue MAGH 2064 JAN-FEB 2008 Government of Nepal Ministry of Finance Singhdurbar, Kathmandu, Nepal In the presence of Hon'ble Finance Minister Dr. Ram Sharan Mahat and Vice President of the World Bank Mr. Praful Patel, Finance Secretary Mr. Vidyadhar Mallik and Country Director of the World Bank in Nepal Ms. Susan Goldmark, signing agreement on 31 January 2008 in Kathmandu. Government of Nepal Ministry of Finance Singhdurbar, Kathmandu, Nepal Tel: ++977-1-4211379 Fax: ++977-1-4211770 E-mail: [email protected] Web: mof.gov.np g]kfn ;/sf/ cy{ dGqfno s]Gb|Lo cg'udg OsfO{sf] ;"rgf g]kfn ;/sf/n] ljut aif{x? b]lvg} /fh:jsf] d"n cfwf/sf] ?kdf d"No clej[l4 s/sf] sfof{Gjog ub{} cfPsf] Aoxf]/f pBdL Aoj;foLx?nfO{ ljlbt} 5 . ljlnË k|0ffnL k|efjsf/L ePdf dfq d"No clej[l4 s/sf] ;kmn sfof{Gjog x'g ;Sg] / v/Lb u/]sf] ;fdfgsf] jf/]06L, Uof/]06L tyf b]z ljsf;sf] nflu klg ljn lng] lbg] ug{' x'g ;DalGwt ;a}df cg'/f]w ul/G5 . cfkm"n] laqmL u/]sf] dfna:t'sf] ljn lbg' laqm]tfsf] st{Ao xf] eg] cfkm"n] v/Lb u/]sf] dfna:t'sf] lan k|fKt ug{' v/Lbstf{sf] clwsf/ / bfloTj klg xf] . t;y{, v/Lb tyf laqmL stf{n] lan lng ] lbg ] sfodf{ cfkm\gf ] stAo{ tyf bfloTjsf ] kfngf u/L ;/sf/sf] /fh:j ;+sng ug{] sfo{df ;d]t ;xof]u k'¥ofpg cy{ dGqfno ;DalGwt ;a}df cfu|x ub{5, ;fy} ljlnË k|0ffnLsf] cg'udg ug{ gkfn] ;/sf/af6 vl6O { cfpg ] sdrf/Lx?nfO{ { cfjZos ;xofu] ul/ lbg' x'g ;d]t ;DalGwt ;a}df clkn ub{5 . s/ ltg{' sfg"gL st{Jo dfq xf]Og, ;Ddfg kfpg] cj;/ klg xf] g]kfn ;/sf/ cy{ dGqfno s]Gb|Lo cg'udg OsfO{sf] ;"rgf /fh:j;Fu ;DalGwt Aofkf/L, pBf]uklt, sd{rf/L jf cGo s;}af6 s'g} tl/sfn] /fh:j r'xfj6sf] s'g} 36gf x'g] jf eP u/]sf] tYo hfsf/L ePdf lgDg 7ufgfdf] va/ ugx{' g' cg/f' w] 5 . k|fKt ljj/0fdf oyfzL3| sf/jfxL x'g] Aoxf]/f ;d]t cg'/f]w ul/G5 . kmf]g g+= M )!$@!!&^% km\ofS; g+= M )! $@!!&&) Od]n 7]ufgf M [email protected] ;fjef{ d} hgtfåf/f bzsf] ] dn" sfgg" lgdf0f{ ug{ rlgPsf' kltlglwx?sf| ] ;ef g } ;ljwfg+ ;ef xf ] . ;"rgf ljefu FINANCE NEWS AND VIEWS Published By: Monitoring and Evaluation Division Ministry of Finance Singhdurbar, Kathmandu, Nepal Editorial Committee: Shree Ram Pant Shiva Kumar Katuwal Hari Prasad Shrestha Mimangsa Adhikari Rights and Permissions The material in this work is copyrighted. 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Fax 977-1-4259770, Email: moev@ mof.gov.np Website: www.mof.gov.np Note: The opinions expressed by the authors are not necessarily those of Ministry of Finance or editor Editorial Government of Nepal is organizing Nepal Donors Consultation Meeting (NDCM) 2008 in Kathmandu on February 21-22, 2008. A sizeable number of international delegates and representatives as well as local development partners are participating in the meeting in the context of emerging political and economic situation of Nepal. The meeting will assess immediate and short-term fi nancial assistance to Nepal specially in managing political transition and holding Consituent Assembly election, and maintaining economic stability of the country. The meeting would be fruitful to provide fi rst hand information on state of economy and peace process praticed in Nepal to the global development partners. It would also be helpful to present the resource gap of the economy at this diffi cult moment of transition and rapid change. The present state of Nepal’s economy is not in a position to bear the cost involved in such rapid change process. In this context, Nepal needs ever increasing support and assistance for inclusive development and socio- economic trasformation. To organize this NDCM, preparatory meetings were held from February 1 to 4, 2008. In the pre-consultative meeting held in February 1-4, 2008 at Kathmandu several policy papers were presented in the ares of: peace process and emerging scenario, economic update, challenges and road ahead, infrastructure development (water resources, road and drinking water sector) ,foreign aid policy, inclusion, education and health sector were presented by the sectoral ministries and large number of expert on the fi eld as well as local donors partners represented and participated. The discussions proved fruitful in revisiting the sectoral progress and outlining future course of action. Participation by large number of experts, local donors, academia, civil society and media in the meeting helped improve better communication and further enhance the relationship in the implementation of agreed agenda.. The pre-consultation meetings help arriving at consensus on issues that Nepal is facing today. Usually held in every 18-24 month period, the last forteenth meeting of Nepal Development Forum (NDF) was held in May 2004. The 14th NDF was the second to convened in Nepal and the fi rst led solely by Nepal. The next such meeting was scheduled for September 2006. However, evolving political situations, among others, did not allow it to take place in the scheduled time. For this reason, NDCM is going to be organized with a view to encouraging dialogues & refreshing communication with the development partners. The objective of NDCM are to: share the evolving political situation and status of Peace Process in the country; highlight the development agenda and priorities through dissemination of the Three-Year Interim Plan (TYIP); deliver peace dividend to Nepali people,; seek unfettered support of the development partners for the peace process and development programmes of Nepal; reiterate commitment on Paris Principles of Aid Effectiveness and seek the programmatic and action-bound support of development partners; and build confi dence through enhancing communication among the GON, development partners and Nepali citizens. In the main event of the forth coming NDCM, the outcomes of the pre-consultation meeting and agenda for future assistance will be presented and discussed along with the presentation of Three-Year Interim Plan (TYIP), and donors’ support to peace and development in Nepal, National Action Plan for Aid Effectivenes, and results since Peace Agreement signed. Thematic/sectoral group discussions will also be made in the areas such as Inclusion, Health, Education, Reconstruction and Rehabilitation, Infrastructure, etc. A time bound action plan would culminate as a follow up of the consultation meeting. Implementation of agreed agenda will be taken up by the concerned stakeholders so that the responsibility of action would not shrink. The Kathmandu NDCM would further open the doors for dialogue between global partners and Government of Nepal with even more urgency to provide ever increasing foreign assistance for the TYIP, peace dividend -including relief and rehabilitation, infrastructure development, implementation of 23- point Comprehensive Peace Accord (CPA), holding of Constituent Assembly elections and strengthening security management for the peaceful transition and socio-economic transformation. Contents Page No. 1. An Overview of Nepal Donors Consultation Meeting 2008 1 2. A Report on Nepal Donors Pre-Consultation Meeting 3 3. j}b]lzs ;xfotf kl/rfng / cGo ultljlw 10 4. Economic Update, Challenges and Road Ahead - Rameshore Prasad Khanal 15 5. Some Observations on the Recent Fiscal Performance and the Reform Process in Nepal - Tula Raj Basyal 30 6. Nepal's Need for Increased External Assistance - Shree Ram Pant 36 7. Reviewing Foreign Aid Policy 2002 - Krishna Gyawali 41 8. Small and Medium-sized Enterprises in Developing Countries: Some Experiences of China - Hari Prasad Shrestha 47 9. Current Macroeconomic Situation 50 10. cy{ dGqLåf/f ah]6 sfof{Gjogsf ;DaGwdf ;lrjx?nfO{ lgb]{zg 55 11. cy{ dGqLåf/f ;fj{hlgs ;+:yfgx?sf sfo{sf/L k|d'vx?nfO{ lgb]{zg 56 12. cf=j= @)^$÷^% kf}if dlxgf;Ddsf] /fh:j c;'nL ljj/0f 57 13. cy{ dGqfnosf] @)^$ ;fn kf}if dlxgf;Ddsf] dfl;s k|ult ljj/0f 59 14. cfly{s jif{ @)^$.^% sf] lwtf]kq ahf/ / ljQLo If]q ;'wf/ sfo{qmd / k|ult ljj/0f 64 15. World Bank / Asian Development Bank ;Fu ePsf] ;Demf}tf ;DalGw Press Release 68 16. cfly{s aif{ @)^#.^$ sf] ah]6 sfof{Gjog k|ult ljj/0f [k|ltj]bgsf d'Vo a'+bfx? (Major Findings)] 70 17. Success Story : Free From the Gridlock of Poverty 74 18. Nepal: Access to Financial Services (Executive Summary) 75 19. Local Donors’ Meeting Statement by Hon’ble Finance Minister Dr. Ram Sharan Mahat, MOF, 16 January 2008 79 20. Speech by Hon. Dr. Ram Sharan Mahat, Minister of Finance, Nepal And Governor of the World Bank for Nepal At the 2007 Annual Meetings of the Boards of Governors of the Bank and the International Monetary Fund (Oct. 20-22, 2007, Washington, DC, USA) 82 21. Photo Gallery: NDCM Pre-consultation Meeting Feb. 1-4, 2008, Kthmandu 85 AN OVERVIEW OF NEPAL DONOR CONSULTATION MEETING 2008 1.