World Bank loan for GRID project against Nepal's interests

Published On: August 31, 2022 03:45 PM NPT By: SHREE RAM SUBEDI

KATHMANDU, August 31: Experts have said that the concessional loan agreement signed between the World Bank and Nepal on Monday for the purpose of getting assistance to avoid and adapt to climate-related disasters is not in accordance with the international norms on climate finance and the stance that Nepal has been is taking at international forums. In the field of climate-sustainability and adaptation, their argument is that it is completely wrong to take a loan as the financial assistance given to an underdeveloped and at-risk country like Nepal should be in the form of grants.

Nepal and the World Bank (WB) on Monday signed a concessional financing agreement for US $100 million (Rs 12.7 billion) for the Green, Resilient, and Inclusive Development (GRID) initiative. With this support of the World Bank, preparations on supporting the priority policy actions in the areas of water, land use, climate-smart agriculture, sustainable forest management, urban waste and pollution control are being made.

This is the first out of three concessional loans of the GRID financing that the international lending institution is providing to Nepal. The budgetary support aims to support improvements in the enabling environment in Nepal toward a green, climate-resilient, and inclusive development. 

The agreement was signed by Ishwori Prasad Aryal, joint-secretary at the International Economic Cooperation Coordination Division of the Ministry of Finance (MoF) and Lada Strelkova, operations manager of the WB for the Maldives, Nepal, and Sri Lanka.

"If Nepal took loan assistance in the field of adaptation, climate resilient  and upliftment to climate-related disasters under GRID cooperation, it is completely wrong. This is contrary to the demand that Nepal has been raising at international forums," says Raju Pandit Chhetri, director of Prakriti Resource Center, a policy and research NGO promoting environment-friendly policies and development practices.

Chhetri says that even in the International Development Cooperation Policy announced by the Ministry of Finance itself in 2019, assistance in the field of environment protection and adaptation should be in the form of grants. “The government should immediately stop taking loans for climate change, resilience, and climate disaster management. This is contrary to human sensitivity, our position and international agreements on climate finance,” climate change expert  Dr Bimal Regmi said in a tweet on Tuesday.

Despite its insignificant contribution to global climate change, Nepal is one of the leading countries in the world in terms of climate risks. Nepal has been raising the demand that the international community should set up a separate fund to deal with the loss and damages caused by climate-related disasters at international climate-related forums.

Dr Pem Narayan Kandel, secretary at the Ministry of Forests and Environment, said that GRID support is important for Nepal  but its  implementation detials is yet to discussed. "Most of the programs under this cooperation are related to the construction of physical infrastructures, but these issues are also directly related to climate-related disasters," said Secretary Kandel.

Aryal, joint secretary for the Ministry of Finance, who signed the agreement on behalf of Nepal on Monday, argues that the agreement contains 'budgetary support' but not 'project support'. “Based on our needs and priorities, this assistance will be used in areas including infrastructure development. It is not related to the areas of resilience and adaptation to climate-related disasters,” says Aryal.

He says that this support will be important for Nepal's development efforts, economic recovery after COVID-19, disaster management, climate and environmental risks.

Last year, various donor agencies had pledged to support Nepal with 4.2 billion US dollars by 2030 under Green, Resilient and Inclusive Development (GRID). A strategic action plan with the identification of priority areas to be determined by this assistance has not yet been made.

Experts say caution should be taken while seeking assistance from donor agencies on issues related to climate change. "We are at risk due to global warming. Along with that, if we have to take loans for financial support related to climate change, it will be a double blow for us," says climate expert Raju Pandit Chhetri.

He argues that Nepal and Nepalis should not be burdened.  Climate Change Expert Dr Bimal Regmi argues that the issue of adapting to climate-related disasters is very sensitive, and says, “Taking a loan from a donor agency to address this issue is an insult to the poor and vulnerable population.”

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