ADB hosts Partnership Forum for Nepal, Mahat presents bleak economic picture
The Asian Development Bank (ADB) hosted a Partnership Forum for Nepal today during its 48th annual meeting to affirm international support for the country, following the devastating April 25 earthquake.
At the meeting – jointly chaired by ADB president Takehiko Nakao and finance minister Dr Ram Sharan Mahat – Mahat said that the devastating earthquake will have serious macro-economic consequences in Nepal’s economy and the country’s projected five per cent economic growth will be suppressed as a result of catastrophy. The government has downgraded the economic growth to five per cent from earlier target of six per cent due to poor agriculture production.
Likewise, housing sector and serive sector has been hit badly with the assets destroyed, he said, adding that it will take years for the sectors to regain consumers’ confidence. “The banking sector profit is also likely to decline ass realty sector has been hot hard. The damaged cultural and historical heritage sites will definitely take toll in tourism sector.”
Last year the country hosted some 800,000 tourists. But the number could plunge due to avalanche at Mt Everest – post devastating earthquake that damaged all three heritage sites in Kathmandu, Lalitpur and Bhaktapur – that has forced the mountaineers abandon their attempt this year too. Some 10 hydro-poer plants – making them a total of 90-MW – have been shut down temporarily due to earthquake, Mahat added.
He informed the development partners that the reconstruction could cost $10 billion but the country needs $500 million for immediate humanitarian assistance for rescue and relief.
Mahat also mentioned that the most urgent help the country still needs are search and rescue, tents, and surgical equipment for displaced and injured people. He also explained although food and water can be provided from emergency stock of the government, additional supply will be required in coming weeks.
After rescue and relief are secured, Nepal would need substantial assistance for rehabilitation and reconstruction. Mahat informed the meeting that the government is now preparing the groundwork for medium to long-term reconstruction efforts by setting up a $2 billion National Reconstruction Fund, to which the government has already earmarked $200 million from its own resources. “We are counting on our development partners to fill the gap,’’ he added.
“The earthquake has set us back on the development front,” he said, adding that sfter decades of policy and political uncertainty, Nepal had just begun gearing up for a higher trajectory of economic growth. “We had been boosting infrastructure while working on the next generation of economic reforms but this momentum has now been disrupted by the disaster, the scale of which we have not faced for over 80 years.”
Nakao, on the occasion, reinforced Mahat’s views by adding that Nepal has been implementing sound macroeconomic policies, structural reforms, investment in health and education, together with the efforts to enact a new democratic constitution, and it is disheartening to see this devastation. The international community should make every effort to avoid a reversal of the country’s progress in economic development and poverty reduction, he added.
“The international community stands together with the people and government of Nepal at this challenging time,’’ Nakao added.
The delegates from 25 countries and representatives from the United Nations (UN), World Bank (WB), International Monetary Fund (IMF) and European Investment Bank (EIB) attended expressed their deepest condolences for loss of life and reiterated their solidarity and continuing support for the people of Nepal.
Participants from countries and international organisations described that they have already been providing temporary shelters, medical aid, and food. Neighbouring countries and others are sending rescue and medical teams. Civil Society Organisations are also providing immediate help based on their experiences in disaster response.
The meeting recognised the central role of the government in coordinating relief and reconstruction efforts. They stressed the importance of a damage and needs assessment to be carried out by the government jointly with ADB, the World Bank, UN and other partners. Such a comprehensive assessment should be the basis for a ‘rebuild better’ approach to make the country more resilient to future disasters. Nepal and other delegates welcomed Japan’s proposal to organise with ADB and other interested development partners a conference to support reconstruction.
ADB for its part has already released a $3 million grant to support humanitarian efforts in the earthquake-hit areas and announced that it will provide up to $200 million of additional resources for reconstruction. In addition, ADB can reallocate up to $300 million from existing ADB projects in Nepal.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members—48 from the region. In 2014, ADB assistance totaled $22.9 billion, including cofinancing of $9.2 billion.