The International Development Association (IDA) of the World Bank has agreed to provide a grant assistance of SDR 23.2 million (equivalent to Rs. 2 Arba 45 Crore 94 Lakh) to the Kingdom of Nepal for the implementation of two separate projects, namely, Rural Access Improvement and Decentralization Project and Economic Reform Technical Assistance Project (ERTA). Two separate agreements to this effect were signed between His Majesty's Government of Nepal and the World Bank at the Ministry of Finance, today. Under these agreements, the Bank will provide a grant assistance of SDR 21.2 million (equivalent to Rs. 2 Arba 24 Crore 86 Lakh) for Rural Access Improvement and Decentralization Project and a grant assistance of SDR 2.0 million (equivalent to 21 Crore 8 Lakh) for Economic Reform Technical Assistance Project.

The objectives of Rural Access Improvement and Decentralization Project are to assist the residents of participating districts of the Kingdom of Nepal to utilize improved rural transport infrastructure and services, and benefit from enhanced access to social services and economic opportunities. The project mainly consists of two parts (a) Rural Transport Infrastructure Improvement and (b) Capacity Building and Advisory services. The project will be implemented in 20 districts viz; Udaypur, Siraha, Dhanusha, Mahottari, Sarlahi, Rautahat, Makwanpur, Dhading, Nuwakot, Rasuwa, Nawalparasi,Rupendehi, Kapilbastu, Palpa, Syangja, Kaski, Salyan, Banke, Bardia and Kailali. The grant assistance under this project will be used for rehabilitation and upgrading of about 800 Km of existing dry-season rural roads to all-season standard, upgrading of about 200 Km of existing rural trails and tracks to dry-season road standard in remote hill districts, carrying out routine and recurrent maintenance of about 3500 km of rural roads and construction of about 350 short-span trail bridges also in 15 districts not connected by motorable road. Out of the total project cost estimated at US $ 44.04, HMG and respective District Development Committees shall bear US $ 9.94 million; and US $ 2.10 million equivalent of grant assistance is expected from Swiss Development Cooperation. The project will be implemented by Department of Local Infrastructure and Agricultural Roads/ Ministry of Local Development and respective DDCs. This project is expected to be completed by June 30, 2010.

The objectives of Economic Reform Technical Assistance are to assist HMG/N in strengthening its capacity to implement economic reforms aimed at improving service delivery, public sector management, increasing inclusion and reducing government role in the economy and putting Nepal on a higher growth path. Under this assistance, a Challenge Fund of US $ 2.0 million will be created for the purpose of financing economic reform activities to be carried out by the relevant line ministries and public sector entities involved in the economic reform process. The grant assistance will be used for providing technical assistance for governance reform including civil service reform, performance management, strengthening anti-corruption initiatives and improving public service delivery in key areas such as health and education. The assistance will also be used for providing technical support for the privatization of Royal Nepal Airlines Corporation, Nepal Oil Corporation and Nepal Telecom Ltd. The Project will be implemented by National Planning Commission and is expected to be completed by June 30, 2008.

Mr. Bhanu Prasad Acharya, Secretary, Ministry of Finance, and Mr. Tashi Tenzing, Acting Country Director, World Bank, Nepal Country Office, signed the agreements on behalf of the Kingdom of Nepal and the International Development Association, respectively.

His Majesty's Government of Nepal has expressed its sincere appreciation to the World Bank for this assistance and for its continued support in the socio-economic development of Nepal.