Axel van Trotsenburg is World Bank’s Vice-President for Concessional Finance and Global Partnerships. He currently leads the policy negotiations and replenishment process for the International Development Association (IDA), the World Bank’s largest sources of development aid, providing no-interest, long-term credits and grants to 82 of the poorest countries of the world. Republica’s Prem Khanal talked to van Trotsenburg, who was in Kathmandu for a three-day visit.
How do you assess World Bank’s five decade-long role in Nepal’s development?
We are happy that the World Bank has been able play a constructive role in helping Nepal achieve its development goals. This can be taken as a testimony to the fact that the World Bank is a long-term development partner with a strong commitment to extending all possible support to help Nepal achieve its core development objectives. We have been extending strong support for sustainable poverty reduction, education and health. As far as the outcomes of these development efforts are concerned, I am happy to note most of the joint efforts between Nepal and the World Bank have produced wonderful results and have helped put Nepal on a sustainable development path. Poverty reduction has been one remarkable achievement for Nepal over last few years; though there are still many challenges.
Similarly, impressive reduction in maternal mortality, which remains a big challenge for many low income countries, is appreciable. We have also seen encouraging progress in extending the supply of clean drinking water. However, this doesn’t mean that Nepal has no serious challenges. Of course, there are many challenges ahead and I believe, with a strong partnership and cooperation between Nepal and the World Bank, we can overcome these challenges and help keep Nepal in a sustainable development path.
Undoubtedly Nepal’s poverty reduction efforts have been encouraging over the last decade, but at the same time the country has witnessed growing income inequality. Isn’t this a worrisome development?
Yes, rising inequality is a concern but this is not a problem unique to Nepal. Many countries—developing and developed—face the same problem. I think rising inequality needs to be understood in a multi-dimensional way. The problem of widening inequality sometimes arises when poverty reduces faster than reduction in inequality. But I believe with sustained reduction in poverty, like the one seen in Nepal, there will be a gradual decline in inequality in coming years. At the same time, we shouldn’t forget that by lifting many thousands people out of poverty we have been able to touch their lives. So, this is a very important achievement. We at the World Bank believe that providing equality of opportunity is the most powerful means to fight inequality. Equality of opportunity basically begins with promotion of economic opportunities for women, particularly in education, health and employment so as to enable them to engage in various income generating activities.
Could you please highlight the role IDA is playing in Nepal’s development pace?
Nepal has been benefiting a lot from IDA funds and technical advice and it has been able to produce many impressive outcomes that can be presented to the international community as success stories. Nepal has some great stories to tell in maternal mortality reduction, community driven development projects and poverty reduction through schemes run by the Poverty Alleviation Fund. I think these successes can be replicated in many low income countries. We continue to encourage governments to identify what the people need rather than us thinking about what is important to them. In this vein we have also have urged the Government of Nepal to tell us how we can support them in achieving the goals they have set for Nepali people. Of course we understand that various problems arise in implementing projects. So we encourage governments to share their problems so that we can help in sorting them out on the basis of experiences that we have gathered from all over the world. We also encourage governments like Nepal to champion new ideas in development and tell us how we can be a better partner to achieve their larger economic and development goals.
Could you please tell us about the issues you discussed with Prime Minister Dr. Baburam Bhattarai during your meeting on Tuesday?
We had a very productive and cordial meeting with the Prime Minister. During the meeting the Prime Minister highlighted the need to develop hydropower and infrastructure, particularly roads. I think this is very much in line with the development strategy that Nepal and World Bank have been adopting for last couple of years. In addition, we also discussed a number of efforts that the Bank and government are putting into reducing poverty and improving social sector outcomes. We appraised the Prime Ministry that the World Bank is committed to a strong coalition with Nepal and will support the development policies it adopts for infrastructure to social development in the coming days.
Issue of inequality is multi-dimensional. The problem of widening inequality can arise when poverty reduces faster than reduction in inequality.
Given the deepening financial crisis in Europe and other parts of the world, how likely is reduction in the World Bank’s development aid to low income countries like Nepal?
We are currently in the 16th cycle of IDA which started in July last year and will end in June 2014. As per our agreed program, we have committed US $600 million to Nepal for the three-year period. We have time and again committed that despite the ongoing economic problems in the West, there will be no reduction in resources for low income countries. One encouraging development is that despite the fiscal stress that some of the traditional donors of IDA are facing, we have been able to mobilize additional financial support from emerging countries, ranging from Russia to Mexico, from Saudi Arabia to China. The World Bank mobilized US $50 billion during the IDA-16 replenishment.
Given the prolonged political transition in the country, what kind of development policies would you advise for Nepal’s development?
One of the beauties of the World Bank is that we believe we have no comparative advantage in interfering in the political economy of a country. We believe Nepalis themselves are in a better position to choose which policy suits them best. So, it is not the job of the World Bank to advise any country on how to navigate its politics. What the World Bank can do is share international experiences to help countries solve problems that appear while executing development projects. We have said many times that the World Bank is committed to support those countries that have passed through difficult periods and we believe such countries need more support from the international community despite the difficult external environment. What I believe is, as long as we maintain an effective channel of communication, we can ensure good financial management along with good implementation of development projects. So, the World Bank is committed to promoting a strong partnership of openness so that we can continue to support low-income countries in their development endeavors.