At the International Conference for Nepal’s Reconstruction (ICNR) in June, Nepal was pledged USD 4.1 billion (out of the USD 7 billion deemed necessary for rebuilding) and a massive rebuilding undertaking seemed to have gained momentum. Forecasts from the Central Bureau of Statistics (CBS) projected growth to decline to around 3% in FY 2014-15 due to damage caused by the earthquakes and the disruption in economic activities that followed. Reconstruction, it was hoped, would provide impetus and soften the blow.
The government’s ambitious target of attaining 6% GDP growth in FY 2015-16 was largely backed by the anticipation of large scale reconstruction activities. In July, it presented an expansionary budget to boost reconstruction with planned capital spending increased by 141% over the revised estimate for the last fiscal year.
Crisis after Constitution
As the NC-UML government shifted its focus andprioritised fast-tracking the Constitution, formation of the reconstruction authority and expediting reconstruction efforts took a backseat. Subsequent protests at customs points in the Tarai brought trade to a standstill and resulted in an acute shortage of fuel, food, medicine, and construction material all over the country, especially in Kathmandu. Two months on, there is no end in sight to this impasse.
It is becoming increasingly likely that the most immediate reconstruction need – the rebuilding of 500,000 private homes before winter – will not be met. For people who live in highlands, where yields are low or may have been lost due to the earthquakes and where food needs to be supplied from elsewhere, this means no house and no food this winter.
Donor countries and humanitarian organisations are now talking about proceeding with winterisation – humanitarian relief that aims to fortify the shelters of survivors so that they can at least survive the severe Himalayan winter. ‘Building back better’ will probably not start before spring 2016.
Meanwhile in Kathmandu, all bids to pass a bill and establish the National Reconstruction Authority (NRA) have failed. Earlier the CPN-UML backed out when its coalition partner NC sought to pass a reconstruction bill, now the NC is refusing to endorse a version reworded by the UML.
If the border crisis lasts any longer and until Nepal finds a supply alternative from India, reconstruction will simply not pick up steam. And with the government announcing the prioritization of energy projects and trade routes to China in order to overcome the current border crisis, rebuilding has gone further down the pecking order.
That Nepal raised, albeit in pledges, an amount equaling half of FY 2015-16’s budget shows money is not in short supply. The ability to spend, which would convince donors to give more aid, however is sorely lacking. In addition, perpetual delays in forming the NRA and the current crisis make it uncertain when reconstruction will actually begin.
On November 19, the government announced that the National Planning Commission (NPC) would oversee reconstruction until the NRA was established. In the absence of a body with a fast-tracking mandate, will donors still be willing to pour in the support they pledged back in June? That is a billion dollar question to which the government seems to have no answer.