A member of World Bank-led Multi Donors Trust Fund (MDTF), which administers over $500 million fund to support the housing grant for the earthquake affected households, has indicated that they would oppose any effort by the government to renegotiate the current arrangement to provide phased housing grant.

On Wednesday, Prime Minister KP Sharma Oli told Parliament that the government would discuss with the World Bank-managed fund to alter the current arrangement in favour of providing two instalments: Rs 15,000 and Rs, 50,000. 

“We would try to convince the government against the large payments,” Ivan Vuarambon, Swiss Development Cooperation’s lead on the MDTF, told the Post, after a meeting of the fund called to discuss the emerging agreement among Nepal’s political parties to alter the arrangement. “But if the negotiations fail, we may decide not to continue with the programme.”

Donor officials say that government’s effort to change the terms of arrangement raises legal implications and questions on the very feasibility of housing assistance programme itself.

“The phased payment is related to the quality of the construction and the inspection process to ensure it. It goes against government’s own Post-Disaster Recovery Framework that emphases on build back better,” Vuarambo said, adding that donors have a common view on the issue. Other donor officials, however, declined requests for comment.

PM Oli bowed to pressure from the main opposition Nepali Congress and agreed to restructure the payments into two instalments following discussion with the donors.

Madhusudan Adhikari, secretary at the National Reconstruction Authority (NRA), said that the payments can be restructured if there is political will. But other NRA officials say that this will put enormous pressure on the national coffer.

The MDTF was set up by the World Bank to enable donors to coordinate their finance for Nepal’s post-disaster housing reconstruction. According to World Bank, current committed financing include $200 million from World Banks IDA’s Crisis Response Window; $100 million credit from JICA for parallel financing; $25.5 million in the World Bank-administered Multi-Donor Trist Fund (US-$9.6 million, Switzerland-9 million Swiss francs and Canada-10 million Canadian dollars); about $200 million earmarked by I/NGOs for the sector; and $50 million from the World Bank’s budget support.