NZ aid organisations call on to push for debt cancellation for Nepal
Humanitarian aid organisations are calling on the New Zealand government to advocate for the immediate and unconditional cancellation of Nepal’s foreign debt after devastating earthquake on April 25 and May 12 and subsequent aftershocks.
NGO Disaster Relief Form chair Ian McInnes is reported to have said that New Zealand NGOs are adding their weight to a growing global call for debt relief in Nepal and have banded together to ask the Minister of Finance Bill English to advocate for debt cancellation and relief amongst other World Bank and IMF members.
The New Zealand press has reported that the Nepal government has an external debt of NZ$5.4 billion, which it is obligated to repay at the same time as it is trying to provide emergency relief to its people and rebuild vital infrastructure damaged by the earthquake.
Citing examples of International Monetary Fund’s around NZ$140 million debt relief to Guinea, Liberia and Sierra Leone following the Ebola outbreak, McInnes is quoted that the IMF has shown indication of debt relief.
According to the rule, Nepal could qualify for assistance under the IMF’s Catastrophe Containment and Relief Trust (CCRT), which aims to relieve debt burdens of low-income countries like Nepal.
However, Nepal will have to demonstrate that the natural disaster has directly affected at least one third of its population and destroyed more than a quarter of its productive capacity, to qualify for the trust.
The majority of Nepal’s debt is owed to the World Bank and the Asian Development Bank – approximately NZ$2.15 billion and NZ$2.6 billion, respectively – the New Zealander press reported, adding that a lesser amount – that stands at NZ$77 million – is owed to the IMF. Using this fund to relieve some of the financial pressure on Nepal could provide substantive help to the country, it reported.
Ranked 145 out of 187 on the United Nations (UN) Human Development Index (HDI), the country is dependent on outside funding to provide relief to its populace in need of humanitarian assistance.
Around 800,000 houses have been completely or partially damaged leaving some four million people roofless by the devastating earthquake. The Post-Disaster Needs Assessment (PDNA) has estimated Rs 666 billion ($6.66 billion) for reconstruction of damaged homes, hospitals, government offices and historic buildings.
Pauline McKay of CWS has been quoted as saying that humanitarian aid NGOs are concerned Nepal’s reconstruction will be overtaken by other pressing humanitarian demands.
Though, it seems a far-fetched idea that the IMF, World Bank and Asian Development Bank would cancel Nepal’s debt, some of the international NGOs have been lobbying for it. They can cancel the debt of any of the country, if it is bankrupt and has no capacity to repay the loans. However, Nepal still has a fiscal space, can pay its loan and not bankrupt yet.