Terming the current phase in Nepal as ‘stalled transition,’ the World Bank has identified key interventions such as help prepare a post conflict programme; continue lending support and make efforts to keep focus on development.

Ken Ohashi, the World Bank?s Nepal director

Ken Ohashi, the World Bank’s Nepal director (File Photo)
According to the Interim Strategy Note (ISN) prepared by the World Bank country office, Nepal currently finds itself in what it calls ‘stalled transition’ in which the political process hits some obstacles and stalls. “Or as Nepal finds itself now, even though the peace process is intact, the reform and development side is moving slowly,” the ISN states.

“This, however, is not a sustainable long-term scenario, for fundamental tensions remain unresolved,” it states.

The World Bank normally prepares ISN for countries in significant political transition situation. The Bank has prepared ISN for Nepal covering the period between 18 to 24 months “until a new order emerges.”

“The basic strategy of ISN is to protect past reform gains and help government prepare for important post conflict programmes,” said Ken Ohashi, Country Director, leading the presentation and discussion on ISN in the capital on Wednesday.

In its ISN, the Bank also lists two other likely scenarios – steady transition in which country moves steadily along agreed political roadmap and deterioration in which political processes fail resulting in widespread conflict and breakdown in key state functions. If Nepal attains the steady transition, the Bank would help organise a donor conference to fund major post conflict programme (most likely after CA elections) whereas if the situation deteriorates, the Bank plans to continue support for community-based program while possible.

As per the ISN, the Bank will provide $143 million support to Nepal in the fiscal year 2007 with the possibility of providing additional $30-70 million as budget support. In 2008, the Bank plans to provide $210 million with the possibility of additional $30-70 million as budget support.

“Currently, Nepal faces two basic challenges. In short-term, there is the challenge of completing the political process and in the long-term, the challenge is to bring about socio-political and economic transformation, from a feudal/illiberal system to open/liberal system,” said Ohashi.

Ohashi said that the long-term challenge would take a long time to overcome completely. “I can give you an example of my country Japan where this process has been going on since 1850 and I doubt it is complete yet,” he said.

Cautioning Nepali leaders to avoid what he called ‘peace trap,’ Ohashi said “sustainable peace is not just about political accommodations.” He said peace trap –where will be great deal of willingness to meet all sorts of special interest demands leading to rollback of reforms – will lead to fiscal weakness, policy incoherence and low growth. Ohashi said this calls for the government to focus on difficult policy decisions to foster development immediately, not after peace.

Ohashi said that in order to deal with uncertainty, it was important for the country to establish the credibility of state, focus on inclusion agenda, and focus on development.