Preparation of a three-year rolling expenditure plan should be expedited to raise the efficiency of public sector investments. Nepal has benefited from the quotas on garments imported by the US, but the quotas will be reduced over time and eliminated by 1 January 2005 as part of the WTO s Agreement on Textiles and Clothing. Sudden removal of the quotas would be devastating for this nascent industry, as Nepal would then have to compete directly with garments made in the People s Republic of China and India in this important market. The garment industry must now take steps to be ready for the removal of this protection in 2005. Reducing the level of poverty thus remains the Government s major development challenge.
Income distribution is skewed in geographical, social, and gender terms.
However, the wide scope of the Plan s targets means that the impact on poverty is often lost when the relevant programs are implemented. The Government recently prepared an Interim Poverty Reduction Strategy Paper, which provides a more focused and comprehensive framework for poverty than the Plan. The Paper emphasizes that the Government should consider the impact on poverty when it prioritizes development projects. The Paper will need to be further focused though, and the resulting priorities incorporated into the Tenth Five-Year Plan, for which planning begins in 2001. In addition, improved information for monitoring the impact of specific projects on poverty is necessary for planning purposes.