Nepal: Devastating Earthquake, 2015

Reconstruction and Rehabilitation Plan and challenges

Surya P Acharya

Joint Secretary

Economic Policy Analysis Division

Ministry of Finance, Government of Nepal

Sept. 1, 2015 suryapacharya@yahoo.com

Outline of the Presentation

1. Earthquake, 2015 and its affects

2. Current macroeconomic scenario

3. Reconstruction and new construction (PDNA)

4. Challenges – immediate, medium and long term

5. The way forward: Policy, Institution and

Finance

6. Conclusions

Nepal Devastating Earthquake, 2015:

Main epicenter – 86 km west from Kathmandu

Affected districts 31 out of 75

Clips of the Nepal quake, 2015

Partially taken from the presentation of NTV /ICNR

Nepal: Earthquake, 2015 - Affects

Human

Casualties 8,790

Injuries 22,300

31 Districts Hits

Cattle losses -57 000+

Over half a million houses were destroyed

Multidimensional poverty is likely – 2.5 -3.5

percent Hurdles in drinking water and sanitation, schools and health

facilities.

Hundreds of historical and cultural monuments destroyed or

extensively damaged.

Increased food insecurity.

3.04

0.16

2.75

5.80

3.90

4.26

3.85

4.61

3.76

5.05 4.58

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00G

row

th R

ate

fiscal year

Annual growth rate of GDP

Growth falls suddenly Lowered by 1.6 percentage points in FY 2015

Macroeconomic Scenario (2014-15)

Gross Domestic Product 21.24 Bn USD (producer Price)

6.90 Bn USD (real)

Economic Growth 3.04 % (Basic Price) (targeted 6.0 %)

Per Capita Income 762 USD

Inflation 7.2 %(targeted 7 %)

Government Revenue 18.4 % (as percentage of GDP)

Government Expenditure 23.3 % (as percentage of GDP)

Trade Balance 33.4% -deficit (as percentage of GDP)

Balance of Payment 145 billion - surplus

Remittance 27.7 (as percentage of GDP)

Outstanding Public Debt 24.5 (as percentage of GDP)

Domestic Debt 9.1 (as percentage of GDP)

Foreign Debt 15.4 (as percentage of GDP)

Post Disaster Need Assessment and Donors Commitment

In June 25, International Conference on Nepal’s Reconstruction (ICNR) - 2015 was conducted

To carry out PDNA, GoN convened a meeting of local development partners on May 15

◦ PDNA followed a methodology jointly developed by EU, WB and UN system along with the support of ADB, JICA by creating an oversight mechanism and coordination team

◦ Over 250 officials and experts from GoN and 30 DP agencies were involved in 23 thematic and Sectoral working groups

◦ Each sector specified the damage, losses, recovery needs and suggested implementation arrangement.

PDNA was presented at ICNR

Donors committed to support Nepal

Damages and Losses

The total damage and losses is - US$ 7.07 bil (in US$ million)

58% 25%

10% 7%

Social sectors

ProductiveSectors

Infrastructuresectors

Cross CuttingIssues

Sectors

Resources

needs (US$

millions)

Damages 5174

Losses 1890

Total 7065

Private 76%

Public 24 %

Financial Resources Needs

The total recovery needs- US$ 6.7 billion

Sectors

Resources

needs (US$

millions)

Social Sector 4077

Productive

Sector 1156

Infrastructure

Sector 743

Cross cutting 719

Total 6695

60.9% 17.3%

11.1%

10.7% Social sectors

ProductiveSectors

Infrastructuresectors

Cross CuttingIssues

Challenges – Immediate

Search and rescue – limited equipment, machinery, trained and experienced human resources

Relief – logistic supply chain management and distributive justice in relief material; remoteness of many villages, rugged terrain, threat of landslides

Coordination – aid and relief material management, air traffic management, single international airport, information and communication gap; duplication and imbalance in supply and relief materials benefiting more accessible villages

Connectivity – damage of infrastructure, dispersed and hard to reach isolated mountainous areas

Challenges – Immediate and Medium Term

Capital formation and management – resource planning and utilization of technical, financial and humanitarian aid.

Private sector recovery – critical to ensure the availability of finance through banking and non banking (cooperative) channels.

Revitalization of cottage and SMEs – for revitalizing local economic fabric.

Recovery for women, women headed family, PLWD to reconstruct their houses – protection of most vulnerable people

Challenges – Medium and Long Term

Managing the labor (skill/un-skill) – high demand for demolition, clearing of debris, reconstruction of destroyed and damages dwellings and physical infrastructure constru.

Managing the external sector – revive export oriented industries as road and dry-port to northern side are damaged; address projected worsening trade balance.

Managing the aid and loan – plan and implement projects to recover all 23 sectors, separate interest of donors and NGOs,

Sustained resource mobilization – improve governance of reconstruction and recovery funds, pooling of resources including debt management and grant assistance; risk management

Challenges – Medium and Long Term

Family protection, GBV and child labor control – support disadvantage groups as they have suffered most losses/damages on food stocks, livestock and their livelihood.

Maintaining the environment and forest – natural forests were destroyed, presser now on timber as half a million houses have to be built

Maintaining growth – bring back agriculture and livestock farming, win confidence of tourists, revival of wholesale and retail trading industries

Challenges – Medium and Long Term

HRM - It is the biggest challenges for immediate tasks and reconstruction of World Heritage sites, hydro and physical works.

Establish resilience through Disaster Risk Reduction (DRR) - increase public awareness, invest in Build Back Better (BBB) principle, implement revised building code, apply Mandatory Rule of Thumb (MRT) in rural areas, establish early warning system, preparedness measures and retrofit schools and hospitals, Build the big infrastructure like road, hydro-power, tourism infrastructure,

The way forward

Policy Measures for Reconstruction

Legal Framework - Reconstruction Ordinance – special Reconstruction Authority is established, Land Acquisition, Land Registration, Public Procurement, and Environmental Impact Assessment related Acts are amended to provide fast track way out to the Authority - an Extra Ordinary Mechanism.

Policy Measures – Post Earth Quake Reconstruction and Rehabilitation Policy is underway to formulate, Housing and resettlement policies, Public Private Partnership Policy, etc;

Basic Directives on Settlement Development Urban Planning, Building Construction-2015 are issued.

Institutional Set Up- National Reconstruction Authority formed, CEO has been nominated.

Financial Management for Reconstruction

Established the reconstruction fund with initial allocation of Rs 2,000 million (US$ 20 million)

Allocated Rs 74 billion (US$ 0.74 billion) for the reconstruction authority

Allocated Rs 14 billion (US$ 0.14 billion) to the line ministries for current FY 2015/16

Commitment from Development Partners Rs 440 billion (US$ 4.40 billion)

Continue to Seek support from Development Partners to address gap in resource needs

Conclusion

April and May 2015 earthquakes in Nepal have affected most economic and vital sectors of Nepal.

There is urgent need for recovery and resilience disaster risk reduction and need to ‘Build Back Better’

Needs to cope challenges and swiftly implement recommendations made by Post Disaster Needs Assessment (PDNA).

External Support for long ruin is also desirable.

Thank you