No to Climate Loan

Alliance for Aid Monitor Nepal has learned that the Nepal Government is finalizing arrangements to receive finance to address issues of Climate Change and to mitigate its impacts in Nepal. The total amount concerned is NRs 4.32 Billion of which NRs 3.6 Billion is a grant. The Ministry of Environment (MoE) and the National Planning Commission (NPC) have been lobbying the Ministry of Finance for approval of the finance. World Bank, the Asian Development Bank and the International Financial Corporation are committed jointly for the loan under the ?Pilot Program for Climate Resilience? (PPCR).The PPCR is administered by the World Bank.

This Pilot Program for Climate Resilience is intended to provide incentives for scaled-up action and transformational change in integrating climate resilience planning with national development planning, consistent with poverty reduction and sustainable development goals. The program, PPCR, sits within the SCF or Strategic Climate Funds and counts as Official Development Assistance. That is to say, officially, this funding is aid.However, the PPCR?s development has not had an easy passage and some experts have not been impressed.

It is difficult to unravel all the details but so far AAMN has identified the following concerns: First, the PPCR has been criticized because its funding is largely through (concessional) loans. As Benito M?ller writes, ?Given the patterns of differentiated (historic) responsibilities, the costs for developing country adaptation are seen as debts to be borne by the still largely responsible industrialised world, and debts cannot be repaid by loans,? (see M?ller?s 2008 International Adaptation Finance: the Need for an Innovative and Strategic Approach Secondly, CIFs (Climate Investment Funds) are also criticised for the significant speed at which they have been designed, promoted and implemented without due consultation with wider stakeholders. (See: Celine Tan, Third World Network, ?No additionality, new conditionality: a critique of the World Bank?s Climate Investment Funds? Briefing Paper 2, 2008: www.foe.org/pdf/CIF_TWNanalysis.pdf).

The language of the Fund has also been criticised for implying recognition of the UNFCCC (the UN Framework Convention on Climate Change) principles as merely guidance for the Fund?s policies rather than as binding internationally negotiated commitments of state parties which must be respected. They also demonstrate a lack of familiarity with the principles negotiated under the Convention and the legal status of commitments under the UNFCCC (see: http://www.twnside.org.sg/title2/finance/twninfofinance20080510.htm). It is accepted that global climate change is caused primarily by G8G20 countries.
 A UN Convention has ratified a principle that compensation should be provided to countries like Nepal and other LDCs by world powers like the EUs, China, America, Russia, Japan , and India . Why then, AAMN asks, when our contribution to carbon emissions in to the atmosphere is a mere 0.025%, is Nepal being asked to take on a loan to meet costs of planning how to deal with the adverse affects of climate change?

AAMN calls for an explanation of the rationale for this particular financial package. Have the issues raised by concerned experts (noted above) been addressed at government level? Bearing in mind that AID makes up a full 25% of our budget ? and 33% of that is already in the form of foreign loans of one sort or another, - AAMN urges the Government of Nepal to better inform its citizens when new initiatives of this type are being promoted. Nepali citizens need to be treated to some grown-up discussion around these and other aid related issues. Alliance for Aid Monitoring Nepal will be developing its role in support of just such discussion in the months and years to come.

For further details

Contact: Mr. Prabhash Devkota
Coordinator AAMN Mobile: 9851089513

To discuss technical aspects of the above release:
 Prof. Dr. Keshav Raj Khadka
Chairperson AAMN Mobile: 9851046845