The latest World Economic Outlook report of the International Monetary Fund (IMF) goes some way towards explaining the monumental consequences of, first, last year's devastating earthquakes and, second, on the heels of the quakes, the four and half months of the Indian blockade. Nepal Rastra Bank, in its periodic reports, has been trying to underplay the extent of the economic damage of these two events, by making us believe that the country, during this time, was still growing at around 3-4 percent, not stellar by any measure but not downright depressing either. But according to the IMF, the real economic growth for 2015/16 is likely to be a truly abysmal 0.5 percent, the lowest in 14 years. Were it not for the steady inflow of remittance, which makes for nearly 30 percent of national GDP, the economy would perhaps have tanked. But how long can the country continue to rely on remittance from the volatile Middle East, now roiling under slumping oil prices? Thus another recent report of the World Bank, South Asia Economic Focus, warns against the consequences of "the potential slowing down of remittance inflows" to Nepal.Thankfully, there is also some good news. The World Bank expects the economy to recover on the back of strong reconstruction activity in the next fiscal year, with expected growth of 5.8 percent projected for 2017. We too would like to believe that 6-7 percent growth is achievable, given the sheer scale of reconstruction that lies ahead. As destroyed and new infrastructures are built, the private sector will be engaged. Thousands of new jobs will be created. Reconstruction (plus a push on national priority projects like Pokhara international airport) could thus be the impetus that kick-starts the stalled economy. That is the best-case scenario. The bitter reality, however, is that nearly a year after the first big earthquake on April 25, 2015, little has been done to rebuild the lives of around 600,000 families across 11 worst-hit districts displaced by the earthquakes. Prime Minister KP Sharma Oli's (Nepali) year-end address on April 12th was full of promises for quake victims. But there has so far been little action. At the international donor meet last year, the international community had committed around US $4 billion, including US $1 billion from India alone, for post-quake rebuilding. Most of this money has not materialized as our government is yet to furnish a credible plan of how it intends to use it.
We can blame India or China or any of our other bilateral and multilateral partners for not helping Nepal enough in this difficult time. But what can they do if we can't even decide how to properly use the money they have pledged? Moreover, talks with Madheshi parties have stalled for over two months; two months after the lifting of the blockade, diesel, petrol and LPG are still in short supply; black-marketing in these products is flourishing. The Oli government, in other words, has failed to govern. In this situation, how do we convince the international community to come and support reconstruction led by the same seemingly incompetent government? How do we ask foreign investors to come invest in Nepal when they have no incentive to do so? But it's not all government's fault. Perhaps there has also not been enough pressure from the civil society, the media and the business community to rouse it into action.
Related story
NEPSE jumps 83 points, hydropower sector leads gains
