ADB Unveils $2.3 Billion Strategy to Drive Nepal’s Economic Transformation (2025–2029)
The Asian Development Bank (ADB) has officially launched its Country Partnership Strategy (CPS) for Nepal for the period 2025–2029, outlining a bold plan to support the country’s transition toward a green, inclusive, and employment-focused economy. Backed by $2.3 billion in concessional financing, the strategy sets a framework for development during Nepal’s crucial phase of economic transformation as it prepares to graduate from its Least Developed Country (LDC) status.
Key Strategic Pillars
The new CPS revolves around three strategic priorities:
- Private sector-led, green economic transformation.
- Inclusive, high-quality public services and human capital development.
- Environmental sustainability and climate resilience.
ADB aims to support productivity growth, private investment, job creation, improved infrastructure, and deeper integration into global value chains. The strategy also emphasizes disaster preparedness, climate adaptation, and building a sustainable foundation for long-term prosperity.
Supporting Nepal’s National Goals
The CPS aligns closely with Nepal’s 16th Five-Year Plan and the government’s Green, Resilient, and Inclusive Development (GRID) framework. It integrates digital transformation, federal capacity building, and social inclusion, with a strong focus on empowering women, youth, and marginalized groups.
“With Nepal moving toward LDC graduation, this strategy is a timely and strategic roadmap that supports a more inclusive and resilient growth model,” said Arnaud Cauchois, ADB’s Country Director for Nepal. “It prioritizes local and foreign investment, better infrastructure, and skill development, all while strengthening disaster and climate resilience.”
Collaboration with the World Bank
To enhance coordination and impact, ADB has jointly developed this strategy with the World Bank Group under the 2025 Full Mutual Reliance Framework. Together, the two multilateral institutions account for nearly 70% of Nepal’s development financing, enabling deeper cooperation through joint policy dialogues, project co-financing, and knowledge sharing.
Financing Tools and Priority Sectors
Nepal, classified as a low-risk Group A developing member, will access concessional ordinary capital resources (COL) along with grants under Asian Development Fund 14 for specific thematic areas. ADB also plans to leverage: Co-financing with partners
- Green and thematic bonds
- Local currency bonds, including Nepalese rupee-linked bonds.
The core sectors of engagement include:
- Energy and transport
- Urban and water infrastructure
- Agriculture and rural development
- Education and skills development
Supporting areas include public sector management, finance, trade, and private sector development.
Addressing Structural Economic Challenges
Nepal faces structural constraints due to its landlocked geography, limited regional trade access, and heavy dependence on remittances—which accounted for over 25% of GDP in the last fiscal year. ADB has stressed the urgency of shifting from a remittance- and consumption-based model to one that is productivity-driven, with higher exports, FDI, and job creation.
Despite a growing working-age population, job creation has lagged. Productivity remains low, especially in sectors like agriculture and manufacturing, and Nepal’s education system continues to face serious quality and capacity issues. Vocational training programs also struggle with limited industry linkages.
Looking Ahead
ADB’s 2025–2029 strategy is designed to be flexible and adaptive to Nepal’s evolving needs and global uncertainties. Its focus on reforms, capacity building, and investment aims to create a robust foundation for Nepal to achieve its long-term vision of becoming an upper-middle-income country within the next two decades.
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