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Rural Finance Sector Development Cluster Program

sector: Finance | country: Nepal

Program complexity and timing. The program was an ambitious attempt to reform the Nepal rural finance sector in a sustainable manner. In this, the program achieved several reforms that are likely irreversible. However, program implementation coincided with a challenging political situation: the transition from a monarchial to a parliamentary system. Thus, certain outcomes that required legislative actions could not be achieved due to non-functioning of Parliament. The complexity of program design and the implications of certain components for others added to implementation challenges, especially with respect to procurement.

Program tranche. The loan tranches were front loaded with $40 million, disbursed at approval. Had the release been more back loaded, it is possible that the authorities would have had more incentive to obtain legislative approval when Parliament functioned intermittently.

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