Saturday, March 4, 2017

Nepal: Huge investment pledge and a new financial sector reform loan

Foreign and domestic investors pledged investment commitment (at this stage its "letter of intent" [LOI]) totaling NRs1,445.5 billion (around $13.5 billion) at the Nepal Investment Summit held on March 2-3 in Kathmandu.  The investors showed interest in hydropower, hotels, metro rail, airlines, tunnels, tourism, energy, agriculture, infrastructure, mines and financial sector.
  • China: $8.3 billion (airport, highway, tunnel, water supply, hydropower, railways, road, smart grid)
  • Bangladesh: $2.4 billion (food and construction)
  • Japan: $1 billion (hydropower)
  • UK: $1 billion (energy, agriculture, infrastructure)
  • Sri Lanka: $500 million (hydropower, solar, wind)
  • India: $317 million (investment bank, solar, steel plant, tourism, industrial and biomedical, )
  • Nepal: $11.5 million (pulp and paper, construction, manufacturing, agriculture)
The last such investment summit was organized back in 1992. The investment summit had a broad support from across the political parties. 

The big question is: What is the government going to do (or what different is it going to do) to translate these commitments into actual investment? The government doesn’t have a plan yet. But, they are going to start working on it immediately by setting up sectoral committees to follow up on the pledged investment.  

The World Bank is providing $100 million Development Policy Credit (the third in a series of program loans) to enhance financial sector development; restructure and consolidate the financial system; strengthen the legal and regulatory framework for crisis management, banking and insurance supervision and payment systems; and enhance the governance and transparency of the banking sector.

Here is a the latest Financial Sector Development Strategy (FY2017 - FY2021) approved by the government.