WASHINGTON, May 6, 2024—The World Bank’s Board of Executive Directors has given the green light to an $80 million development policy credit for Nepal aimed at bolstering the stability of the financial sector, diversifying financial solutions, and enhancing access to financial services.
Faris Hadad-Zervos, the World Bank Country Director for Maldives, Nepal, and Sri Lanka, emphasized the significance of the project, stating, “This project supports Nepal’s green, resilient, and inclusive development and will help create an enabling environment for private investment to contribute to Nepal’s economic growth, particularly benefiting the poor and vulnerable.”
The initiative, known as the third Finance for Growth Development Policy Credit, seeks to improve the functioning of Nepal's financial sector to drive private sector-led growth. Tatsiana Kliatskova, the World Bank task team leader for the project, highlighted the importance of the operation in supporting the government's financial sector reform agenda, stating, “This operation supports the government’s transformative financial sector reform agenda to promote private sector-led growth. The reforms in banking, insurance, and capital markets are instrumental for the sector’s resilience and the critical role it plays to enable private capital mobilization.”
In addition to strengthening supervision in the banking and insurance sectors, the project will foster financial product innovations in various markets and enhance financial inclusion through digitalization, improved credit infrastructure, and financial literacy, with a specific focus on women entrepreneurs.
Furthermore, the operation aligns with Nepal's climate agenda by incorporating measures such as requiring disclosures of climate-related risks in the banking sector portfolio, risk-informed pricing for insurance products, establishment of a framework for green bonds issuance, and integration of climate-related commitments into credit guarantee products.