National 4 (Spotlight Weekly)

‘If All Goes Well, Nepal Can Recover From The Conflict In Two Or Three Years’

— Dr. SHANKER SHARMA

With the announcement of the cease-fire with the Maoists and the beginning of peace talks, the government has sharpened its focus on reconstruction and rehabilitation. Vice-Chairman of the National Planning Commission Dr. SHANKER SHARMA, who has been associated with planning issues for a long time, spoke to KESHAB POUDEL on how the government intends to rebuild conflict-shattered regions. Excerpts:

In every conflict, rehabilitation and reconstruction are important tasks after the cease-fire is announced. What plans are you making in this direction?

From our perspective, whenever the peace negotiations start, we have to massively sanction funds for reconstruction and rehabilitation work. If we consider the last three or four years, we have lost some 250-300 million US dollars worth of infrastructure like schools, health posts, hospitals, agriculture service centers, roads, bridges, telecommunication projects, power plants and VDC buildings.

Have you started reconstruction work?

Some work has already been initiated in the areas of health care, school reconstruction and rehabilitation, as these are some of the priority areas of the government. But for other infrastructure areas like roads, small hydropower and telecommunication projects, we need more money. Even where we started work, there was no guarantee of safety. Although we had some amount of reserve money, reconstruction and rehabilitation of costly infrastructure projects were delayed. They have to be expedited.

Does the government have enough funds?

We don't have enough funds of our own. We need to properly mobilize foreign aid at this point. We may not have to spend too much money for two to three years on regular expenditure for security. However, savings in security will not be enough.

How do you rate the government's ability to carry out these works?

I agree with you that most important issue is the capacity of the government. Can we do rehabilitation and reconstruction work as quickly as possible? Does the government have the capacity even if we get the money? Since we don't have local bodies like VDCs and DDCs, it will also create a problem in terms of quick recovery. It would have been much easier if VDCs and DDCs were in place, as they could mobilize smaller user groups and communities to implement the rehabilitation and reconstruction works. We don't have that advantage right now. In the absence of local bodies, these things have to be done by government line agencies, which are not efficient.

How do you find the response of other countries?

As soon as negotiations start, we have to expedite reconstruction and rehabilitation work. Since the peace process has a positive impact on the economy and the people, we have to do what we can do right now. We have already started working in this direction. There are big projects and programs in the country, including some in the far-western and mid-western regions. Such projects were stopped or postponed because of security reasons. We have to expedite such projects. In terms of such projects, we don't have resource problems. On the other hand, we have to expedite development activities.

What will be the quantum of resources needed?

We have been suffering from resource constraints for the last two years, especially on projects and programs in rural areas. It might be for security reasons. Sometimes they are not priority projects. We don't have problems concerning projects and programs. We can prioritize them. The donor community has also been urging us to expedite these activities. We will start negotiations with donor countries on the type of support that may be forthcoming. Donor countries have the experience of Sri Lanka, sub-Saharan Africa and many other countries on post-conflict reconstruction efforts. We have to explore all avenues right away.

Do you have any fresh estimates about the scale of damage and cost of reconstruction?

There are two aspects of damage. One is reconstruction and rehabilitation and the other is indirect. An estimated 250 million to 300 million US dollars is needed to reconstruct electricity and telecommunication projects, bridges and a number of other infrastructures. Some of things have already started. During this fiscal year, we have unable to do some big projects worth Rs.5 billion to Rs.7 billion due to security reasons. We can expedite these. If we go back to last year's development, we have sanctioned development budget worth of Rs.50 billion. Those we can take out from the budget. We focus on areas where the projects and programs are already identified and are in the pipeline. Once our economic activities go in full swing, we will have more money.

What are the main sectors hit by seven years of violence?

Almost all sectors have been hit by the violence. Mostly, telecommunication sector, electricity, roads projects, VDC buildings were destroyed. In many places, the health centers attached to the VDCs were also destroyed. Some schools buildings and suspension bridges were also destroyed. We have a list of such physical destruction.

Do you believe the country will be able to recover soon?

For bigger projects, we have the tradition of inviting construction companies from outside. Some foreign-aided projects are handled by big companies. My assumption is that if we really focus our attention on reconstruction works and on completing priority projects, we can do most of the things in two or three years.

You have been with the NPC for the last five years. How do you see the total damage inflicted on the economy by the violence of the last seven years?

It will be much larger in figure. If we calculate last year and seven months of this fiscal year, we have lost directly Rs.100 billion. Last year our GDP growth was minus 0.6 percent, which was a direct result of the violence. Otherwise, we could have easily attained an economic growth rate of 5 percent plus. Even this year, we could see the first four months data our industrial sector growth was minus 8 percent. It has not revived. The tourism sector's growth rate is also going down. We are on a downward spiral. Because of this, the country has lost some Rs.100 billion in the last couple of years.

What has been the impact in the rural areas?

We have seen a direct impact on our rural economy. Employment opportunities have gone down. Government employees are not present in the villages and many development activities have been stopped or postponed. Most of the poor residents of rural areas have faced the impact of the violence. Hundreds of thousands of people have left their villages and gone to urban areas and to India. We cannot put an economic value on trauma, psychological impact, and loss of the family members. This will be enormous. People are happy that our economy will revive as soon as peace prevails. We should begin rehabilitation and reconstruction work right away. There is no time to wait. This is the golden opportunity for the country to make a quick recovery.

What immediate steps is the government taking following the announcement of the cease-fire?

Right after the announcement of the cease-fire, we have started to take certain urgent initiatives in the direction of rehabilitation and reconstruction. We are exploring possibilities on revitalizing construction work and expediting some of the activities. We have held meetings on carrying out development works that are included in the red book of the budget. Everybody agrees that we have to expedite development activities postponed for security reasons. We will do that. We have initiated dialogue with donors to mobilize funds.

How do you see the World Bank's recently published Country Assistance Strategy?

The result is positive in two senses. First, it has given credibility to the reform programs in Nepal. Second, we hope to get greater budgetary support. I have received many telephone calls from donor representatives saying the cease-fire would have a very positive impact on the Nepalese economy. Donors have been supporting Nepal's reform but they were specially concerned about the security situation and political instability. Nepal's friends have shown the willingness to support our reconstruction and rehabilitation needs. This has been very positive.

What are your economic predictions should an enduring political solution be reached soon?

I am very positive that our economy will move forward. The only problems are internal and we need to change our thinking. People working in the bureaucracy and development institutions still hold the old mind-set. Actually, it has deteriorated. We have to gear up development activities. We also need to change the modalities of development. We must encourage the private sector and hold elections as soon as possible. The elections can enhance the people's participation. Our Tenth Plan has proposed many different modalities. If we depend on the line ministries alone, things will be delayed. We cannot expect to complete the works within two or three years. We have to explore different modalities.

What is your experience of the reconstruction of the three district headquarters Jumla, Accham and Sandhikharka?

The government has sanctioned Rs.10 million for each district. They have already developed their plans. We have urged them to prioritize things. They need to maintain some of the buildings and start working in them. In the second phase, they have to go for reconstruction of buildings. In all three districts, work has gone on normally. It will take three years to fully rebuild the physical infrastructure. What we have found is that NGOs and some INGOs are also supporting the reconstruction and rehabilitation plans. My feeling is that the districts headquarters will be in a better shape in the next three years.

Don't you think some special package would be required to encourage displaced people to return home?

We were already working on rehabilitation programs. Now we have to think of reintegration of these people. We don't have any modalities, but we had some potential funds even before the cease-fire. We have a plan on how to reintegrate the displaced population in their villages. That is on the list.