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World Bank Signals Strong Support for Nepal’s Transition to Federalism

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The World Bank today signaled strong support for Nepal’s ambitious transition to federalism when its Board of Executive Directors approved a $200 million credit to improve public financial management.

The Fiscal and Public Financial Management Development Policy Credit is the first in a two-part program to support the Government of Nepal in establishing a framework for fiscal federalism and improved public financial management.

Nepal today is at a historic juncture as it transitions from a unitary to a federal democratic republic. Expectations are high that the new structure will deliver on greater equity and accountability,” said Qimiao Fan, World Bank Country Director for Bangladesh, Bhutan and Nepal. “This operation will help establish a fiscal framework that will ensure that the newly elected governments can deliver better services to all Nepali citizens.”

This operation will support implementation of the Intergovernmental Fiscal Arrangement Act; establishment of the National Natural Resources and Fiscal Commission; adoption of the Fiscal Responsibility and Budget Management Bill; strengthening of public financial management systems; improvements in budget execution; and reforms to improve revenue collection.

Commending Nepal for successfully concluding local, state and federal elections under the new constitutional framework, the Executive Directors welcomed the Bank’s strategic shift to supporting federalism to help avoid disruptions, improve service delivery and promote transparency and accountability. Directors encouraged the Bank to fully support Nepal’s transition to achieve inclusive development, especially in traditionally underserved areas, in coordination with other development partners.

This Development Policy Credit approved today is one of several components in the World Bank’s overall support on federalism in Nepal. Other support includes policy advice, new investment lending to improve service delivery and improve capacity, as well as restructuring of the existing portfolio to align with the new federal structure.

The World Bank also approved a $66 million credit to modernize Phase 2 of the Rani Jamara Kulariya Irrigation Scheme. The project will modernize sub-branches, tertiary canals and water courses so that irrigation water can reach farmer fields with optimal flows.  It will also help strengthen Water User Associations and provide agriculture production support.  During Phase 1, which closed in September 2017, the project upgraded intakes and feeder canals and initiated an agriculture development program.  Spread over a command area of 14,300 hectares, the project will benefit one of the poorest areas in the southwest of the Karnali basin in the Tarai.  Nearly half of the people benefitting from the project belong to the indigenous Tharu community.

The World Bank Group and Nepal

The World Bank Group (WBG) fielded its first economic mission to Nepal in 1963 to assess the country’s development prospects and challenges. It approved its first credit in 1969 for a telecommunications project. Since then, the World Bank has provided Nepal $4.75 billion in assistance ($3.48 billion in credits and $1.27 billion in grants). Nepal is eligible for concessional financing support from the World Bank’s International Development Association (IDA). During the IDA17 period (17th replenishment of IDA covering FY2015-2017), the World Bank committed $1.2 billion. This amount included additional financing of $300 million from the IDA Crisis Response Window to respond to the emergency needs after the 2015 earthquake. During IDA18 period (FY2018-2020), Nepal may access approximately $1.3 billion in IDA financing. This includes additional financing from the IDA Exceptional Risk Mitigation Regime financing window. The current portfolio comprises 22 active projects with a net commitment of $2.32 billion. In terms of the number of proj­ects, the energy sector makes up the largest share (5 projects) followed by agriculture and education (4 projects in each sector).

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Strong outbound tourism demand from both traditional and emerging markets in 2017

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Virtually all source markets reported higher tourism spending in 2017, reflecting continued strong demand for international tourism across all world regions. Both emerging and advanced economies fuelled growth, led by the United States which spent US$ 12 billion more on travel abroad. China spent US$ 8 billion more, consolidating its leadership as the biggest spender in the world. The Russian Federation spent US$ 7 billion more and Brazil US$ 5 billion more, both rebounding from weaker spending in previous years. Strong tourism expenditure reflects enhanced connectivity, increased visa facilitation and a global economic upswing.

All top 25 source markets reported higher spending on international tourism in 2017, as highlighted in the latest UNWTO World Tourism Barometer. China consolidated its leadership as the biggest spender in travel abroad in 2017 with US$ 258 billion in expenditure (+5% in local currency).

The other three BRIC economies all substantially increased expenditure in 2017. The Russian Federation (+13%) rebounded after a few years of declines, to reach US$ 31 billion, climbing three places to re-enter the top ten at number 8. Brazil (+20%) also recovered strongly and moved up eight places to number 16 with US$ 19 billion in expenditure. India continued its rise with 9% growth in spending to US$ 18 billion and moved up four places in the ranking to 17th.

“Emerging economies play a key role in tourism development and we are very pleased to see the rebound of the Russian Federation and Brazil, and the ongoing rise of India, as these key emerging outbound markets contribute to growth and market diversification in many destinations”, said UNWTO Secretary-General, Zurab Pololikashvili.

Advanced economies also performed robustly in 2017, led by the United States (+9%), the world’s second largest outbound market. US travellers spent US$ 12 billion more on international tourism to US$ 135 billion. Expenditure from Germany (3rd largest market) and the United Kingdom (4th) both increased 3%, and from France (5th) 1%.

Australia (6th) reported 7% growth and Canada (7th) a 9% increase. Completing the top ten are the Republic of Korea (9th) where expenditure grew by 9% and Italy (10th) where it increased by 6%.

Beyond the top ten, tourism spending also grew notably in Sweden (+14%) and Spain (+12%).

These strong results in outbound tourism are consistent with the 7% increase in international tourist arrivals in 2017. Demand for travel was particularly high in Europe, where arrivals increased 8% last year.

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IEA holds high-level workshop on the future of electricity

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Participants in the IEA's electricity workshop will help focus the work of the next World Energy Outlook's fuel focus on electricity (Photograph: IEA)

The future of electricity will be the “fuel” focus of the next World Energy Outlook, the International Energy Agency’s flagship publication, to be released in mid-November.   

As part of an agency-wide effort on this WEO electricity focus, the IEA hosted a high-level workshop in Paris on Tuesday, bringing together decision makers and leading experts from around the world to provide strategic guidance on the analysis and share their experience. The workshop marked a high point in the IEA’s “Year of Electricity,” examining various aspects of the transformation of the electricity sector this year.

The workshop was attended by representatives from 75 organisations, covering a wide range from government, industry, utilities, manufacturers, downstream, consulting, industry associations, research and academia. It also included a broad regional coverage, with participants representing more than 40 countries, from the IEA family and beyond.

The future looks bright for electricity, which is set to grow at twice the rate of overall energy demand to 2040. In 2016, total power sector investment surpassed that of oil and gas for the first time, propelled by renewables, mostly solar and wind. Meanwhile 1.1 billion people still lack access to electricity globally, new demand is coming from electric mobility, digitalization, cooling and heating.

And the nature of electricity supply is undergoing a major transition, from a century-old foundation of dispatchable fossil fuels to ever cheaper variable renewables, with related market reforms underway. The power sector is responsible for close to 40% of energy-related greenhouse-gas emissions, 60% of coal use and 36% of natural gas use. Understanding changes in the power sector is therefore essential to analysing progress towards environmental goals and understanding global energy trends.

The objectives of the WEO’s focus on electricity will include:

– Assessing the long-term outlook for electricity demand, with insights on traditional and new sources of demand growth such as electric vehicles, digitalization, cooling and energy access in developing countries, and the emerging need for responsive demand.

– Providing in-depth analysis of the speed of the transition underway in electricity supply – highlighting global issues and regional perspectives – based on the latest market data, technology developments and government policies.

– Investigating the implications on electricity security, environmental protection and economic development, with insights on market designs.

– Exploring key uncertainties, resulting from the pace of deployment for new technologies, market and policy developments, and changing consumer preferences.

In addition, this year’s WEO will also have a focus on oil and gas producing economies.

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ADB Operations Reach $32.2 Billion in 2017- ADB Annual Report

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The Asian Development Bank (ADB) Annual Report 2017, released today, provides a clear, comprehensive, and detailed record of ADB’s operations, activities, and financial results over the past year.

Annual operations of ADB reached a record $32.2 billion in 2017, as the bank continues to meet Asia and the Pacific’s growing development needs, according to the Annual Report. This was a 26% increase from the year before.

ADB’s total operations of $32.2 billion last year consisted of $20.1 billion in loans, grants, and investments from its own resources (up 51% from 2016) including nonsovereign operations of $2.3 billion (a 31% increase from 2016); $11.9 billion in cofinancing from bilateral and multilateral agencies and other financing partners; and $201 million in technical assistance (a 11% increase from 2016).

These figures are based on ADB’s new performance measure of “commitments,” or the amount of loans, grants, and investments signed in a given year. ADB introduced this measure in 2017 to promote project readiness at approval stage, expedite post-approval steps, and get closer to project disbursement, by placing more emphasis on when the projects are signed, rather than when they are approved by ADB’s Board of Directors.

“We began a new chapter in meeting development needs across Asia and the Pacific in 2017,” said ADB President Takehiko Nakao. “With the merger of the bank’s concessional Asian Development Fund lending operations with the ordinary capital resources balance sheet from the start of 2017, ADB has a solid capital base to support our operations going forward.”

Mr. Nakao added, “We continue to combine finance with innovative solutions to respond better to the region’s diverse and specific challenges and needs, such as rapid urbanization, climate change, and growing demand for water and energy.”

ADB’s financing of climate mitigation and adaptation reached a record $4.5 billion in 2017, a 21% increase from the previous year. The bank is now in a good position to achieve its $6 billion annual climate financing target by 2020. ADB also mobilized an additional $606 million from external financing, bringing total climate financing to $5.2 billion last year.

The Annual Report emphasizes the importance of partnerships for ADB in scaling up project financing, and for sharing development knowledge and expertise. With the support of donors, ADB established five new trust funds in 2017 that will unlock capital for climate investments through innovative financial products, increase private sector participation in climate change mitigation and adaptation projects, help cities prepare high-priority urban infrastructure investments, increase mobilization of domestic resources, and integrate high-level technology into infrastructure project designs.

On the downside, ADB’s disbursements decreased to $11.1 billion in 2017 from $12.3 billion in 2016, according to the Annual Report. Cofinancing also fell short of ADB’s targets.

“We will come up with concrete measures to increase disbursements and cofinancing, building on the new ADB procurement policy approved in April 2017 and ongoing efforts to leverage the bank’s resources,” said Mr. Nakao.

The Annual Report 2017 presents a more comprehensive picture of ADB operations than the previous annual reports in terms of numbers and institutional data. It provides expanded sections on financial highlights, sector and thematic work, and knowledge. ADB’s specific assistance to countries and regional programs, lists of trust funds and corporate reports, and organizational structure are also added.

The figures in the report update the provisional operations numbers released by ADB in January.

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