Govt told to focus on specific sectors, maintain transparency

Kathmandu, June-26 The International Conference on Nepal's Reconstruction concluded in the capital on Thursday, with donors pledging more than US$ 4.4 billion to help in reconstruction of Nepal.

The conference saw participation of more than 280 representatives from 60 countries and agencies including United Nations and its specialized agencies, SAARC, European Union and various bilateral and multilateral financial institutions. International community has showed immense support to Nepal's effort to resettle people displaced by the earthquake rebuild damaged infrastructures.

Republica spoke to different businesspeople and bankers on Thursday evening to get their reaction on support pledged by donor community. Most of them have suggested to the government to focus on specific sectors, increasing spending capacity, and make spending transparent. Excerpts:

Krishna Prasad Sharma,
CEO, Rastriya Banijya Bank

Various countries, bilateral and multilateral donors announced their assistance for Nepal on Thursday. It, however, may take some time for the pledged amount to come into the government treasury. The fund will increase our foreign exchange reserve. Most of the funds, however, will come in the form of soft loans. This means the government will get cheaper fund for rebuilding and reconstruction works compared to domestic debts like development bonds, foreign employment bonds and saving bonds. Furthermore, the soft loans will come with longer maturity period. After getting support from the donors for reconstruction works,

the government can pour its regular budget into other development projects that we are currently pursuing. Proper utilization of the fund is going to be a big challenge for us. Similarly, we need to enhance our absorptive capacity. Once the fund starts trickling into the government treasury and the government starts spending it, the liquidity (loanable fund) of banks and financial institutions (BFIs) will also increase as will the deposits.

There will be some adjustment in liquidity surplus as the reconstruction and rebuilding will give a boost to economic activities, which in turn will create demands for home, retail, manufacturing and construction, among other loans. One of the challenges, I see is the inflationary pressure in the economic system. However, it can be controlled by introducing appropriate monetary tools.

Narendra Kumar Basnyat,
President, Confederation of Nepalese Industries (CNI)

Donor communities have responded to Nepal's request for reconstruction in a very positive manner. They have pledged support of more than $4 billion. We have to spend the amount in reconstruction in the concept of building back better. The amount has to be used by prioritizing sectors like infrastructure, industry and tourism which needs to be addressed as soon as possible for the recovery of the economy. The Post Disaster Needs Assessment (PDNA) report has highlighted many areas. But we have to prioritize specific areas, allocate time and use the budget in a very productive way. We have to make commitment to utilize the budget in a very productive and transparent way. This will also help us to bring Foreign Direct Investment. The commitment made by Prime Minister Sushil Koirala to make reconstruction works and budget transparent has to be strictly enforced.

Pashupati Murarka,
Acting president, FNCCI

The better part of International Conference on Nepal Reconstruction is that donors' commitment for financial assistance was higher than the expectations of the government as well as the private sector. However, donors' assistance will have no meaning if the government cannot spend in properly. We should improve our spending capacity. The government should begin the reconstruction process immediately so that budget can be spent in time. FNCCI believes that government should directly give cash incentives to earthquake victims to construct their damaged home rather than involving itself in construction of houses. Improvement in government's spending capacity will help local industries as their raw materials and workforce and consumed for reconstruction. Meanwhile, the government should properly identify investment areas rather than make random expenditure. It should put in place strong and accountable channels for investment. Similarly, the government should take private sector into confidence for nation rebuilding.

Rajesh Kazi Shrestha,
President, Nepal Chamber of Commerce (NCC)

Donor community has pledged billions of rupees for Nepal's reconstruction. We should welcome it whole-heartedly. We needed similar gesture from donor community to lift the country from the devastation and normalize the situation. Now, the government should come up with a clear, practical and transparent vision to utilize the support extended by donor community. The conference has become successful as anticipated by the government. Now, the government should focus on implementation part which is very challenging. The government should priorities specific areas and channelize fund accordingly. As majority of financial commitments from donor community have come in the form of soft loan, the government should also have to make long-term play for repayment. In the meantime, the government should treat private sector as a development companion and involve it in mobilization of fund and implementation of reconstruction plans.

Yogendra Shakya,
Tourism entrepreneur

I think the support announced by the international community right after the earthquake is praiseworthy. The international community has showed their love and sympathy toward Nepalis and we are hopeful that this love for Nepal will help to bring tourists to this country. Their positive response shows that everyone wants to help Nepal. We, the tourism fraternity, want to tell them 'Visit Nepal to Help Nepal'. The assistance of more than US$ 4 billion is a very substantial support. But I think just providing soft loan and grants is not enough. Our friendly countries should help us by sending their people to Nepal on vacation and help us run our business. I would like to request them to make us capable so that we can revive our economy ourselves with the support of people all over the world.

Source: Republica