His Majesty's Government of Nepal (HMGN) and three of its development partners, Asian Development Bank (ADB), Japan Bank for International Cooperation (JBIC), and the World Bank (WB) jointly reviewed the portfolio performance of the projects and programs financed by these development partners during September 14-16, 2005. The review critically examined the program/project implementation successes and weaknesses with a view to further consolidating the successes while attempting to find solutions for the weaknesses.

HMGN plans to fully integrate portfolio management and review process in its aid integration process and Medium-Term Expenditure Framework (MTEF) from next review. HMGN proposes a renewed effort to address generic implementation issues which include, improving public procurement, financial management and project management; most of these are aimed to be addressed through the MTEF process, improving public expenditure management, prioritization of expenditures at the level of programs with clear links to outputs and outcomes. HMGN will take the full ownership of portfolio review with a view to scaling up to a broader review process focusing on results. The portfolio review process will gradually be an integral part of the Government's regular planning, programming¸ budgeting and donor consultation process. This participatory approach is in line with the Paris Declaration on Aid Effectiveness.

The review concluded on September 16, 2005 with the signing of the Memorandum of Understanding (MOU) at the Ministry of Finance (MOF) by the Joint Secretary of the Foreign Aid Coordination Division Mr. Rameshore Prasad Khanal, and the Country Director of the World Bank Mr. Kenichi Ohashi and the officiating Country Director of ADB, and the Representative of JBIC. The Government and the three development partners committed to continue to work collaboratively to improve portfolio performance financed by these partners

There were about 130 participants in the two days workshop representing senior officials from the National Planning Commission, the MOF, the Office of the Auditor General, the Financial Comptroller General Office, the National Vigilance Center, the different ministries and departments, Project Managers, Procurement Specialists and Finance Officers from about 30 projects. The National Planning Commission Member Dr. Champak Prasad Pokharel chaired the first day workshop on September 14. The concluding day plenary session on September 15 was chaired by the Vice Chairman of the National Planning Commission Dr. Shankar Prasad Sharma, and was also attended by the Finance Secretary Mr. Bhanu Prasad Acharya, the Members of the NPC, the Secretaries of key ministries and senior officials of HMGN and development partners.

The Finance Secretary Mr. Bhanu Prasad Acharya stressed the need for improving overall portfolio performance. He requested all Secretaries and Project Managers to be proactive and closely monitor the project performance. He also called for a need for close coordination within government agencies and with development partners to ensure smooth project implementation. He emphasized that through MTEF some of the generic implementation issues raised year after year such as, weak public procurement management, financial management, monitoring and evaluation, should be addressed. The Vice-Chairman of the National Planning Commission Dr. Shankar Sharma said that the officials at various levels in the Government are gradually changing the mind set to shift from project approach to output/outcome focused approach. He mentioned about the need for monitoring various sectoral indicators, and implementing reform measures as reflected in the Immediate Action Plan. He said that the Government remains committed to resolve generic issues related to procurement and policy reform issues.

The Country Director of the World Bank Kenichi Ohashi stressed the need to prepare credible sector plans and convince the development partners that the Government has the capacity to absorbing more money and scaling up the spending. He also stressed the need to implement some key elements of MTEF, which include, promulgation of Procurement Legislation, improving public expenditure management, enhancing monitoring and evaluation systems, implementing Project Readiness Filters, and adapting transparency measures. The JBIC Representative Mr. Fusato Tanaka reported about difficulties encountered in implementing JBIC financed projects due to security problem. The ADB Representative Mr. Peter Logan expressed concerns about low utilization of committed funds. He expressed worried about the Net Resource Transfer becoming negative over the last few years. He informed that portfolio performance is one of the key triggers that determine allocations of ADB commitments.