1. I nterim Strategy Note for Nepal FY12-13

2. Today’s Presentation Nepal Today: Progress and Challenges World Bank Engagement FY 12-13 Strategy and Selected Priorities Effective Delivery 1 2 3 4

4. Nepal Today: Economic Outlook Prolonged political transition Resilient but moderate growth (4.6% on average) Remittance-dependent Severe energy deficit Financial sector weaknesses

5. Nepal Today: Human Development 5 Chronic malnutrition (under 5 in %) Gender parity ratio in primary education Under 5 mortality rate Infant mortality rate Headcount poverty rate (%) Key Social Indicators 42 79 118 0.66 57 39 49 0.99 41 Poverty reduction Progress in social welfare Widespread, chronic malnutrition Food insecurity Climate change/disaster vulnerability

6. Key Challenges Going Forward Accelerating Economic Growth Realizing Energy Potential Enhancing Food Security Promoting Gender and Social Inclusion Adapting to Climate Change Improving Lagging Social Indicators Strengthening Governance

8. Sector Distribution of IDA End FY 11 24%

9. Accountable Institutions Equitable Service Delivery Sustainable Economic Growth Tangible Results within a Short Period Social audits increased in grade 1-8 schools: 68% to 83% Right to Information Act regulations being implemented 266 km of strategic roads built 598 km of rural roads upgraded 65 hotels participating in local hotel booking portal Net enrollment: grade 1-5, 92 %- 95%; grade 1-8, 73% - 86% Pregnant women with at least 4 antenatal visits: 29% - 35% Children under 1 year immunized with DPT3: 79% - 89% 69,859 more households with water supply w/in 15 minutes 73,572 more households have latrines

10. Lessons from the last ISN  Use phased approaches  Scale up demonstrated results Keep it simple Be selective  Build on comparative advantage  Leverage broad political support Work smarter  Expand e-bidding  Use 3rd party monitoring and social accountability tools  Build country systems

12. Pillars and Priorities of the ISN FY12-13 Power and diversified energy Roads and bridges Regional networks Agriculture commercialization Access to finance Strengthening governance Gender equity and social inclusion Reducing Vulnerabilities & Improving Resilience Promoting Access to Better Quality Services Enhancing Productivity and Connectivity for Growth Community safety netsFood security Water resource management Disaster managementClimate vulnerabilityUrban servicesImproved nutritionHealth services Skills (secondary, tertiary, TVET) Education quality

13. Access to Electricity & Reliability of Power Looking back:  Ongoing support through Power Development Project, Biogas Program and Micro-Hydro Program Going forward:  Target : to rehabilitate 53 MW generation capacity  Portfolio: Kabeli Transmission and Cross-Border Transmission (Nepal-India regional project)  Pipeline: Kabeli Generation Project ; IFC hydropower credit line  Increasing support through the Scaling Up Renewable Energy Program (Climate Investment Fund)

14. Food Security for the Poor Looking back:  Social Safety Net and Poverty Alleviation Fund results: 10 percentage points decrease in incidence of food insufficiency; 66 percent households obtained a minimum income increase of 15 % (in real terms) and average increase in income of 82 % (in real terms). Going forward:  Social Safety Nets Program- Percent of households reporting increased ability to meet their food needs rises from 91 % to 95 %by June 2013.  PAF II Additional Financing starting implementation. PAF III in the pipeline.  Global Agriculture and Food Security Program grant funds mobilized.

15.  Targeted stipends: 15,000 secondary school students have benefitted from the Pro-Poor Secondary School Stipend Program.  Quality assurance mechanisms: The Second Higher Education Project supports quality assurance and accreditation system for tertiary institutions.  Girls’ training: Under the Adolescent Girls Employment Initiative, 80% of vocational and like-skills training completed and will seek to have 80% of graduates employed within 6 months. Education Quality and Skills Development

16. Governance & Accountability  Promoting community-based development: building on the Poverty Alleviation Fund which has supported community infrastructure and livelihood improvement, with focus on women and disadvantaged communities.  Enhancing social accountability through the Program for Accountability in Nepal.  Strengthening public financial management and procurement through the PFM Multi-donor Trust Fund.  Building local government capacity: improving fiscal and financing frameworks for local service delivery through the implementation of the Emerging Towns Project.  Improving regulatory reform and corporate governance through IFC’s Investment Climate Reform Program.

17. Gender Equality & Social Inclusion  Build country capacity: strengthen country capacity to implement gender and social inclusion policies and programs (Technical assistance)  Strengthen core diagnostics: build on the Nepal Living Standards Survey III data to with in-depth analysis of gender and social inclusion  Incorporate in Bank financed operations: integrate gender and social inclusion into program design and monitor regularly.

19. Better Programming  Replicating and scaling up interventions with demonstrated results and country ownership  Maintaining flexibility to innovate to respond quickly to emerging priorities  Supporting transformative regional projects to reap the benefits of enhanced co-operation  Sequencing analytical work to inform policy and operations design  Strengthening just-in-time technical assistance  Applying the peace filter for peace and conflict sensitivity of operations

20. Portfolio and Pipeline by ISN Pillar In USD (millions) Portfolio end FY 11 Pipeline FY12-13 Expected new commitments of USD 400 million in FY12-13

21. Maintaining Strong Disbursements

22. Managing for Results  Improved ISN results framework, with outcome indicators and baseline data  Regular joint monitoring of progress towards results  Geo-referencing and mapping locations of Bank funded projects  Mainstreaming approach of social accountability within operations

23. Thank you