NATIONAL 6 -(Spotlight Weekly)]

Appeal For Global Cooperation

As Least Developed Countries seek international support in their development endeavors, Nepal examines its challenges

By BHAGIRATH YOGI

In 1971, when the United Nations identified 25 nations as 'Least Developed Countries (LDCs),' Nepal was one of them. Three decades later, the number of LDCs has risen to 48 and Nepal still retains its membership in the 'poor people's club.'

The 48 countries (33 in Africa, nine in Asia, five in the Pacific and one in the Caribbean) that are destined to live under deprivation and underdevelopment share common constraints in their efforts toward modernization.

Women workers : All work and less pay

With a view to bringing these countries -- which house 605 million people (more than 10 percent of the world population) -- into the development mainstream, the United Nations agreed in 1997 to organize the third UN conference on the LDCs in Brussels this year (May 14-20). The conference, which aims at eradicating poverty in the LDCs through their progressive integration into the world economy with the support of the international community, is expected to propose action for the sustainable development of the LDCs.

"Though LDCs in South Asia did quite well compared to other parts of Asia during the '90s, disparities between the LDCs and developed countries have further widened," said Dr. Shanker Sharma, member of National Planning Commission. "Nepal is ahead of other countries in South Asia in terms of opening of trade and investment, market orientation, involvement of NGOs in social service delivery and empowering local bodies."

According to the United Nations, more than half of the population in the LDCs lives on less than US$ 1 a day. Global trade increasingly marginalizes their economies, as their share of world exports is 0.4 percent. Right from the beginning, NGOs and other sections of civil society have been involved in the UN conference preparatory process both at national and international level.

According to officials, Nepal was preparing to raise the issue of unrestricted access to markets in developed countries, increase in official development assistance (ODA), issues related to accession to the World Trade Organization (WTO) and addressing supply-side constraints, bridging the digital divide and paying special attention to the fate of the landlocked LDCs.

Minister Mahat : Pleading for the country

Addressing the meet in Brussels Monday, the head of the Nepalese delegation, Finance Minister Dr. Ram Sharan Mahat, urged more favorable support from the global community to the LDCs in their fight against poverty. He asked for duty-free and quota-free market access for all products from LDCs, debt relief, and special concessions to landlocked countries and speedy accession to the WTO, among others. Dr Mahat called for cancellation of all outstanding debt owed by the LDCs. "External debt has become a severe obstacle to the development of many LDCs including Nepal," said the finance minister.

"Much of the scanty resources of LDCs are directed toward debt servicing. Debt cancellation will release a significant amount of resources for investment in the social sector and infrastructure development of the LDCs, which are crucial components of poverty alleviation," he added.

According to the United Nations, between the mid-1980s to the mid-1990s, the total debt of LDCs grew from $70 billion to $135 billion. The NGO community, too, are lobbying hard to press the developed countries to waive all the debt to the LDCs. They have also raised issues related to finance and the market, governance and political structure, access to and control of natural resources and people's empowerment.

Trade liberalization and free-market policies should benefit and protect the interests of the peoples of LDCs. Openness of markets should not be confined only to capital, but there should be freer flows of information, technology and people, said the Kathmandu Declaration adopted by a meeting of Asian NGO Coordination Committee that met here last month

Poverty reduction remains a paramount challenge for the LDCs even in the new century. "The donor community and domestic governments must re-orient their programs for poverty reduction," said Arjun Karki, president of Rural Reconstruction Nepal (RRN) and member of international steering committee of LDC Conference from Asia.

According to the country report prepared by Nepal to be presented in the Brussels meet, improvement in the human development index of Nepal was most remarkable among the developing countries in the 1990s. Literacy rate increased from 40 percent in 1991 to 53 percent in 1998.

Development of physical infrastructure has also been observed to be significant in the decade of 1990, said the report. The total length of road, and the total supply of electricity were increased each by more than 100 percent in the last decade. Similarly, significant improvement has been seen in the development of communication and other infrastructure facilities.

The economic reform process, adopted in the early nineties, has given high importance to macroeconomic stability. Fiscal deficit was reduced from an average of 7.7 percent of Gross Domestic Product (GDP) during the pre-liberalization period to 5.8 percent in 1999. Monetary expansion was at a desired level and inflation rate especially in the second half of 1990s declined significantly. However, the development expenditure as well as foreign assistance in the second half of 1990s declined in real terms. Similarly, efficiency and effectiveness of public expenditure in health and education are low and weak, said the report.

On the other hand, declining share of official development assistance, increasing share of loans compared to grants, increased debt burden, widening trade deficits, vulnerable export situation, slow pace of regional cooperation, dismal foreign direct investment (FDI) inflows and rise in world oil prices have been the impediments for high and sustainable growth. Internally, political instability, weak governance, limited resource and rise in terrorist activities have been the reasons for slow development pace in the country.

In addition to natural calamities, Nepal is vulnerable to some of the shocks like the Maoist activity, the Bhutanese refugee problem and HIV/AIDS epidemic. The "people's war" initiated by the underground Maoist group entered has into sixth year. Armed conflicts have taken a heavy toll in terms of human lives and property. Violence has flared up in many districts of the country and is spreading. Similarly, the Bhutanese refugees deported to Nepal by Bhutanese government in 1990 have posed a potential threat to the economy of the country, said the report.

Although, the levels of HIV epidemic are low, it is spreading into the general population and the disease is no longer confined to "high risk" groups. The number of HIV/AIDS infected persons is estimated to be in between 30 to 60 thousand in Nepal. This figure could reach as high as 200,000 in the next ten years. This could create a major social problem in the country resulting in higher health expenditure.

The country report presented by Nepal also proposes a program of action for the next decade (2001-2010). It identifies agriculture, private sector development and FDI, trade, industry and tourism, water resources and infrastructure development, social sector development, targeted programs and employment generation, gender and environment, governance and aid utilization, and maintaining law and order as major areas to be addressed during the next decade.

The country report admits that with a low level of savings estimated at around 15 percent of GDP, the country is unable to finance the level of investments necessary to achieve a desired rate of growth of output. Similarly, taxable capacity of the country and substantial requirement of foreign exchange for amortization requirements together with the current account deficits reveals that external assistance requirement at 2010 would be at least about $ 736 million, about 167 percent higher in comparison to the foreign assistance received in 2000.

As the Nepalese government targets to achieve a high and sustainable growth of about 7.5 percent in order to alleviate poverty and reduce regional imbalances significantly over the next decade, the country will have to give top priority in mobilizing its own human and natural resources and use them efficiently to achieve sustainable development.

Said James D. Wolfensohn, President of the World Bank, addressing the Brussels meet Monday, "The LDCs should clear up the mess (first) that critically dampens the development prospects. "Poor governance, weak institutions and conflict still plagues some LDCs, hampering their ability to attract and effectively use development resources. These counties can certainly benefit from advice and technical assistance, but ultimately it

is up to them to reform institutions, implement regulations, combat corruption and avoid conflict and political instability. The cost of not acting -- both human and economic -- rise every day."

It might be early to become hopeful regarding the outcome of the UN Conference at the turn of the millennia. "It is because the LDCs can't serve well the interests of the developed countries," said Dr. Parthibeswor P. Timilsina, professor of economics at the Tribhuvan University. "Instead for running around for more international aid, Nepal should adopt strong economic policies to ensure judicious use of available resources and increase investment. At the same time, we need to mobilize our own manpower for national development."

It is high time the Nepalese leadership heeded these words of advice to avoid a permanent membership in the 'poor country's club.'