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ADB chief asks Nepal to use potential
KATHMANDU, JUL 28 -
Haruhiko Kuroda, the visiting chief of Asian Development Bank (ADB) has stressed that Nepal would do well to utilise its strategic location to jumpstart its economy. In an exclusive interview to The Kathmandu Post, he stressed that infrastructure-led growth would help Nepal to post 6-7 percent economic growth.
Kuroda termed connectivity as one of Nepal’s biggest weakness and stressed on substantial investment in infrastructure such as transport, power and road. He said that despite huge potential, Nepal hasn’t realised it due to political instability and weak infrastructure.
Stating that infrastructure is not sufficient, Kuroda said, “All infrastructure including road, water supply, airport, electricity, power projects, power grids, telecommunication requires substantial upgradation.” Strengthening of transport and information links with neighbouring countries would help connect Nepal to the global economy and generate more economic opportunities. “ADB is ready to assist to improve transport connectivity including airport expansion and road connectivity,” said Kuroda, indicating infrastructure could be a major investment sector for ADB.
“Nepal should utilize its strategic position of being close to the two fastest economies of the world (China and India),” said Kuroda. “It hasn’t been able to benefit from its neighbours’ economic progress.”
Kuroda stressed on good governance and capacity of the government to utilize aid. “If good governance is missing and government capacity is low, even if the international community provides huge amount it may not be utilized,” he said.
During his four-day visit to Nepal, Kuroda met with Prime Minister Madhav Kumar Nepal, Finance Minister Surendra Pandey and other top government officials and also inspected some of the ADB funded development projects. The Prime Minister and other top officials urged the ADB to assist in some important projects. “They made special reference to a few priority projects and we would certainly take that into account when deciding the sequencing of our assistance.”
Kuroda said his visit to Nepal would not make any major changes in ADB’s development priorities for Nepal. “There could be some changes but nothing radical is likely,” said Kuroda. “Prioritization and sequencing of investment is absolutely necessary as even after doubling the aid, resources are limited compare to huge needs.” Reiterating ADB’s support to Nepal, Kuroda said that ADB will continue to strongly support the country as it undertakes efforts to overcome economic challenges amidst political transition. “ADB will be giving assistance worth US $ 287 million annually from 2011 to 2013,” said Kuroda. Nepal’s largest donor, ADB has doubled its assistance from US $ 258 million in 2007-08 to US $ 559 for 2009-10.
Kuroda said that the political situation of Nepal does affect development assistance, particularly effectiveness of the assistance. “We’re mindful of political developments in any developing member countries but we do not make any political decisions,” said Kuroda. “All decisions are based on efficiency and effectiveness of our assistance.”
According to him, if peace is established further improvement in efficiency would be likely which would encourage ADB for further upgradation of its assistance to Nepal.
Despite relatively high level of inflation and balance of payment(BoP) deficit, Kuroda said he was not so worried about Nepal’s current macro-economic situation. “With global economy recovering, remittance should also recover,” said Kuroda. “However, macro-economic policies should be managed prudently.”
Posted on: 2010-07-29 08:26
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