WASHINGTON—The World Bank’s Board of Executive Directors approved a $150 million ‘Finance for Growth’ development policy credit to strengthen financial sector stability, diversify financial solutions, and increase access to financial services in support of Nepal’s green, resilient, and inclusive development.
“A
well-functioning financial system is a key enabler for the mobilization of
private investment and driver of economic activity,” stated Faris Hadad-Zervos, World Bank Country
Director for Maldives, Nepal and Sri Lanka. “By strengthening the financial sector, this project will contribute to
Nepal’s green, resilient, and inclusive recovery and growth path, particularly
benefiting the poor and vulnerable.”
The second Finance for Growth
operation will support enhanced supervision of the banking sector to address
financial stability risks in the context of the COVID-19 pandemic’s impacts. The
operation will help open up capital, insurance, and disaster risk financing markets,
and foster financial product innovations. It will also support initiatives to
increase liquidity and inclusion through access to external commercial
borrowing, financial digitalization, and financial literacy for women. This will
help improve the functioning of the financial sector to support private
sector-led growth.
The operation also initiates a
new climate agenda, supporting climate finance resilience policy measures
across banking, insurance, and capital markets. This can
pave the way for the introduction of green loan principles and incentives for
green lending as well as new insurance and capital market products adapted to
address both climate mitigation and adaptation challenges.
“Through
this project we look forward to supporting the government’s transformative
financial sector reform agenda which, among others, introduces a first round of
reforms to strengthen financial sector resilience against climate-related
risks. This will lay down strong foundations for a more stable, less
bank-centric and more inclusive financial sector that is better positioned to
mobilize private investment and support real economic activity,” stated Peter Mousley, World Bank task team leader for
the project.
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