Approved by the Bank’s Board of Executive Directors, the credits are part of a package worth up to half-a-billion dollars pledged last week by the World Bank at a donors’ conference in Kathmandu for Nepal’s revival.
The housing reconstruction credit is from the International Development Association (IDA), the World Bank’s fund for the poorest countries. It will provide grants to home-owners to rebuild about 55,000 houses for the poor in rural areas. It will be extended on standard IDA terms with a maturity of 38 years and a six-year grace period.
The budget support approved is an IDA credit to help the Government of Nepal expand relief and recovery efforts while also supporting policy measures to strengthen the country’s financial sector, which has weakened along with the economy. It will be on standard IDA terms.
“With the swift approval of these credits, the World Bank is striving to fulfill its commitment to the people of Nepal to help them in this difficult time by putting in place credible recovery efforts that target support at those most in need,” said Annette Dixon, World Bank Vice President for the South Asia Region of the World Bank. “The impressive pledges at last week’s donor conference show that Nepal’s partners are there when the country needs them and it will now be important to follow through with effective implementation that is transparent and accountable to the Nepalese people.”
The Bank has also announced the creation of a Multi-Donor Trust Fund to enable Nepal’s donors to coordinate their finance for housing reconstruction. Additional support for housing reconstruction will be necessary to help rebuild the more than 500,000 homes destroyed in the earthquakes.
“These credits will enable the Government of Nepal to start work on financing reconstruction of houses to ensure they are rebuilt in a disaster resilient way,” said Takuya Kamata, World Bank Country Manager for Nepal. “The housing reconstruction credit draws on lessons learned in India and Pakistan to channel funds through house-owners while ensuring that building standards are met and funds accounted for.”
In addition to the $200 million housing credit and $100 million budget support, up to $200 million will be redirected from existing World Bank projects in Nepal and invested in reconstruction efforts. Any reallocated money will be replaced with additional funds.