FinMin calls on development partners to increase aid flow

KATHMANDU:

Finance Minister Ram Sharan Mahat today called on development partners to increase the flow of aid to Nepal to help rebuild areas devastated by the 7.6-Richter earthquake of April 25.

He made the appeal during a special forum called Partnership with Nepal on the sidelines of the Asian Development Bank’s Board of Governors meeting being held in Baku, Azerbaijan.

“I want to convey to you a solemn pledge on behalf of the government and people of Nepal. We will rebuild our country. We will rebuild it better. But to support our resolve, we will need the goodwill of our development partners. We need your technical advice, global knowhow and importantly, substantial financial resources to propel us,” he said.

The earthquake that jolted the country eight days ago was the biggest since 1934. It has killed over 7,000 people so far, destroyed over 500,000 houses and rendered millions of people homeless. It has also caused severe damage to crucial physical and social infrastructure, like roads, schools and health posts, in the affected areas, while many monuments, which were preserved for centuries, have been reduced to rubble.

This devastation, according to Minister Mahat, will set Nepal back on the development front, putting a drag on impressive progress made in the social sector ‘such as cuts in infant mortality and access to improved sources of water and sanitation’ and hurt economic growth.

After the decade-long insurgency that ended in 2006 and years of policy and political uncertainty, Nepal’s economy had just begun to revive, with economic growth ticking 5.1 per cent in the last fiscal year after a gap of several years.

Also, the recent signing of power trade agreement with India and pacts to build huge hydroelectric projects had sent a positive message to the international market.

“We were also working on the next generation of economic reforms, enacting or revising about 40 policies, Acts, and regulations. We expected this hard work to pay off with higher growth, but this momentum is now disrupted,” the minister said.

One sector that is expected to be hit is the real estate. The trust in the sector, which was slowly reviving following the burst of bubble around five years ago, has been lost due to formation of cracks in the facade of several condominiums.

“It will take years for the sector to regain the confidence of consumers,” Minister Mahat said.

This erosion in confidence, in turn, will affect the banking sector, as most of the condominiums are built using bank loans, and many homebuyers also turn to financial institutions to purchase these units. So, banking sector’s profits will now likely decline, the minister added.

Also, ‘much of Nepal’s tourist attractions are in central Nepal, and tourism could slow down’.

“Communication and electrical industries have also suffered damage. Industrial supply chains have been weakened, and prospects for the revival of manufacturing have dimmed in the immediate run,” the minister said, adding, “Up to 10 hydro-electric plants generating about 90 MW of electricity have shut down temporarily.”

In this regard, the government is preparing the groundwork for a medium- to long-term reconstruction plan. The government has also decided to set up the National Reconstruction Fund of $2 billion where the government has already earmarked $200 million from its own resources.

“Detailed assessments of loss and damage and financing needs for reconstruction are being done, after which we will make public the true need. We are counting on our development partners to help us meet the eventual shortfall,” the minister said, adding, “We are looking at future challenges in three stages: First is the problem of shelter, as monsoons are coming in less than two months. Second, we will need to explore options for low-cost housing, rehabilitate bridges and roads, and reinstate schools and health posts. Finally, we will have to envision new patterns of semi-urban settlement in our mountainous districts, while restoring our historical monuments.”

Source: THT