Government, foreign development partners agree on harmonization of disbursement practices

KATHMANDU, MARCH 27:  The government and six Multilateral development banks (MDBs) and International Financial Institutions (IFIs)—Agence Française de Développement, Asian Development Bank, Asian Infrastructure Investment Bank, International Fund for Agricultural Development, OPEC Fund for International Development, and the World Bank—agreed to work together to harmonize disbursement procedures and practices to help enhance operational efficiency and achieve Nepal’s development goals.

The agreement was reached at a two-day ‘MDBs Disbursement Harmonization Workshop’ organized in Kathmandu on March 25-26, 2024, by the MDBs and IFIs, in close partnership with the Ministry of Finance.

“Fostering a unified disbursement system among all MDBs will help facilitate allocation of funds, enhance operational efficiency, and ensure timely disbursement of funds to the government to achieve development results,” said Dr. Krishna Hari Pushkar, Secretary of, Ministry of Finance.

 The Government of Nepal and MDB-IFIs agreed to focus on three areas in their future collaboration. The first one relates to harmonizing the flow of funds, reporting, legal and disbursement arrangements for the three-tier structure of government. Similarly, the second area pertains to standardizing reporting templates across MDB-IFIs’ operations in Nepal to reduce the administrative burden on the government.  Likewise, the third one is about strengthening and aligning the country system with MDBs-IFIs to the extent possible.

 “Unprecedented challenges demand urgent action and the need for harmonization among the MDB-IFIs. The World Bank, in its continued efforts to improve operational efficiency and support better development results for our mutual clients, is committed to working with co-financing partners in the area of disbursement harmonization,” said Pamela O’Connell, World Bank Vice President and Controller.

 Government representatives and MDB-IFIs agreed to carry forward the momentum by way of a Memorandum of Understanding between the Government and MDB-IFIs which will be prepared and implemented in a phased manner. The Kathmandu Declaration would be a model to be emulated in other countries.

 “To achieve sustainable economic growth and poverty reduction, it is imperative that budget allocation is fully utilized. The government is committed to strengthening reforms to build transparency and accountability of public financial management systems and strengthen service delivery,” said Hari Prasad Mainali, Financial Comptroller General.

 The workshop was attended by high-level representatives from the government and MDB-IFIs. Participants discussed disbursement and implementation-related opportunities and challenges, and the way forward to supporting MDB-IFI operations in Nepal. Given the federalism transition, legal and disbursement options available for project implementation at provincial and local levels were also discussed, and international experiences were shared.