Nepal faces financing gap to meet SDGs

The government faces financing gap of 38 per cent of the total investment to meet the ambitious target of Sustainable Development Goals (SDGs) by 2030.
To bridge the finance gap, the government must widen revenue base, seek more loans and grants from foreign governments and multilateral agencies, and incentivise private and other sectors to encourage to invest in SDGs, as the government is going to face a financing gap of 38 per cent in investment, according to a study conducted by National Planning Commission (NPC) with the support of the Nepal office of the UN Development Programme (UNDP).
According to the study, Nepal needs an average of Rs 2,024.8 billion per year – which is around 58 per cent of the gross domestic product of the current fiscal year – to achieve SDGs by 2030. “The investment will have to be made per year till 2030,” the study reads. “Nepal needs to spend over Rs 30,372 billion – some 14 per cent more than the projection made in February 2018 – during the 15 years of SDGs starting from 2016 to 2030.”
Nepal needs to make plenty of reforms to meet all the targets within the 2030 deadline, as it is projected to face a financing gap of 21 per cent – Rs 585 billion per year – to implement programmes designed to meet SDGs, the study reads, adding that the financing gap has been seen in private sector investment as well, which must be covered by attracting foreign direct investment, debt financing and equity investment.
“Nepal needs to find the alternative source like climate fund to bridge the finance gap,” according to UNDP Resident Representative Ayshanie Medagangoda-Labe. “Apart from that Nepal will have to make structural reforms and enhance capacity of provinces and local levels to meet SDGs,” she added.
Of the total cost, the government must bear around 55 per cent to meet SDGs, according to the study that has calculated the cost of Nepal to achieve the SDGs, ranging from poverty reduction, education, health and environment to clean energy, industrialisation, urban development, information technology and governance.
The SDGs are a set of 17 goals and 169 targets which not only push for economic growth and infrastructure and social development, but quality education and healthcare services, climate action, innovation, sustainable consumption and industrialisation, and decent work. “Unlike MDGs that expired in 2015, which was blamed to be imposed by the Washington DC-based UN, SDGs is the inclusive effort of all the nations,” Medagangoda-Labe said, praising Nepal’s involvement and seriousness to meet the targets of SDGs.
According to the study, Nepal needs to invest over Rs 4,500 billion till 2030 to provide quality education, over Rs 2,000 billion to ensure good health and well-being, and over Rs 2,200 billion to eradicate poverty. “Nepal needs huge investment – over Rs 6,000 billion – in transport, industry and ICT, till 2030 to build resilient infrastructure, promote inclusive and sustainable industrialisation, and foster innovation,” the study adds.

Nepal needs huge investment for speedy economic growth

Nepal needs huge investment for speedy economic growth.
Delivering his keynote speech in the conference of South Asia Network of Economic Research Institutes (SANEI) today, former finance minister Ram Sharan Mahat said that Nepal needs huge investment for speedy economic growth and also to sustain federalism.
Following the establishment of a federal system, the government needs to make large budget allocations for regular expenditure. The administrative expenses of the three tiers of government – federal, provincial and local – amount to at least 40 per cent of the country’s GDP, Mahat said, adding that the federal transition cost is likely to stand at 3 per cent to 4 per cent of GDP annually for the next four years.
Highlighting that reforms in the economy should be a continuous process to attract investment as the country needs huge investment to address not only growing investment but also the structural bottlenecks of the economy including yawning infrastructure gap, low productivity, lack of job opportunities, sluggish export and ballooning imports, Mahat said that the country has been able to maintain macro stability despite suffering for long from political turbulence in the last two decades. “Economic reforms initiated in the 1990s were unprecedented and they have increased revenue of the government exponentially to around 24 per cent of gross domestic product, created ground for private sector and foreign investment, reduced poverty and also achieved the targets set by Millennium Development Goals (MDGs)."
He also argued that Nepal has performed better in many social indicators including nutrition safety, gender sensitiveness, and has been a champion in reducing women and child mortality, and school enrollment of children (especially girls), life expectancy.
However, slow development in the manufacturing sector, increased migrant worker departures, widening gap between exports and imports, bureaucratic inefficiency, political instability and widespread corruption have prevented the country from achieving its economic goals.
"There are challenges too," Mahat cautioned, adding loss of productivity and competitiveness at home, causing low growth and depopulation is under way in some of the districts to the economy. "The agriculture land in the villages is barren due to lack of youth migration."
Likewise, the rapid expansion of the non-tradable sector is a major threat for the economy and external balances, he said, adding that non-tradable sector are those sectors in which production and services are only for domestic consumption.
He also highlighted the sub-national governance, together with accumulating stress on current account and an emerging tendency to overreach on regulatory matters governing private sector represent major risks in the economy.
Likewise, Prof at Jawaharlal Nehru University, New Delhi, Mahendra P Lama, on the occasion, highlighted Nepal’s straight move from primary sector like agro and forestry to tertiary sector like service sector bypassing the manufacturing sector could be costly for the country. "Manufacturing sector is important for the sustainability of the economy as it creates jobs, raises national productivity, substitutes imports and the economy has multiple advantages of protecting and promoting manufacturing sector,” he said, adding that Nepal’s economy is an urban-centric supra economy that will face institutional laggard in the federal system.
The South Asian experts, on the occasion, urged Nepal to formulate better fiscal measures and enhance tax reform to achieve its economic reform targets. They called for initiatives to reduce the existing high capital output ratio, improve road connectivity, ensure good governance and check the high recurrent expenditure as part of comprehensive economic reform.

NPC calls on local bodies to own SDGs

Calling on the government to make adequate funds available to local bodies so that various programmes could be rolled out to meet the UN-backed goals, National Planning Commission (NPC) has referred to newly-formed bodies as key players in implementation of the Sustainable Development Goals (SDGs).
The new constitution has given significant power to the local bodies, enabling them to not only frame and implement development programmes on their own but also to work as judiciary to make the people get justice at gtheir doorstep. As the local bodies can also frame guidelines and procedures on their own to govern themselves, they must align their plans, policies and programmes with the SDGs to meet the target, according to National Report on the Implementation of the 2030 Agenda for Sustainable Development.
The report prepared by the planning commission, also suggests that the resources need to be allocated properly, otherwise 'implementation of SDGs at local level will be difficult'.
Recommeding a strong partnership between three tiers of government – federal, provincial and local – is extremely necessary to integrate the SDGs into local level structures, the report states that consultation, workshops and trainings will be required to ensure that SDGs are incorporated in provincial and local plans. "It is also equally important to ensure effective participation of women, youth and other marginalised groups in planning and implementation of SDGs at local level.”
A follow-up on Millennium Development Goals (MDGs) that expired at the end of 2015, SDGs is a set of 17 goals and 169 targets covering a broad range of sustainable development issues to be met by 2030.
SDGs aim at promoting well-being of all the people, sustainable industrialisation, inclusive and sustainable economic growth, and employment and decent work for all, apart from the key goals to end poverty and hunger from the world, reducing inequality; making cities inclusive, safe and resilient; ensuring sustainable consumption and production patterns; and taking urgent actions to combat climate change and its impacts.
However, meeting the SDG targets require at least $1.5 trillion a year at the global level.
Likewise, Nepal is, according to the report, trying to manage financial resources from a triangular partnership including public and private sector as well as development partners.

Nepal presents SDG review report

Nepal has presented its Voluntary National Review (VNR) on the implementation of the 2030 Agenda for Sustainable Development in New York.
Vice chair of the National Planning Commission (NPC) Min Bahadur Shrestha presented the report at the High-Level Political Forum on  Sustainable Development, currently in session under the United Nations Economic and Social Council (UNESC) in New York.
Addressing at the session, Shrestha said that Nepal's expected high economic growth of 7 per cent in the fiscal year 2016-17 may be the beginning of a key turnaround for Nepal’s economic growth that will propel the development.
"The country’s ambitious and rights-based Constitution as the overarching guide to sustainable development," he said, highlighting the importance of forging strong partnerships at the national, regional and international levels and among multiple stakeholders for its implementation.
Despite gaps and challenges, Nepal wishes to swiftly complete the unfinished agenda of MDGs, and step up its efforts to achieve the SDGs, building on the encouraging gains made so far, he added.
Shrestha also updated the forum about Nepal’s plans across different goals and targets and informed that SDG codes are assigned to all programmes under the national budget, together with the tracking of expenditures, among other things.
The High-Level Political Forum is the central platform of the United Nations for providing political leadership, guidance and recommendations for the implementation and follow-up and review of the 2030 Agenda.
Likewise, Voluntary National Review is a mechanism through which member states showcase their progress in achieving SDGs, as well as the gaps and challenges facing them.
The High-Level Political Forum – the second forum after the adoption of the 2030 Agenda in 2015 – is being held on July 10-19 with 44 member states including Nepal presenting their Voluntary National Reviews. 

Nepal ranks third in South Asian SDG index

Nepal has secured third position – among South Asian nations – in the Sustainable Development Goals (SDG) Index, indicating that the country is better-off in achieving the United Nations-backed targets within 2030 than many others in the neighbourhood, according to the SDG Index and Dashboards Report 2017 titled ‘Global Responsibilities: International Spillovers in Achieving the Goals’ released today.
Nepal trails Sri Lanka and Bhutan in the index, but has performed better than India, Bangladesh, Pakistan and Afghanistan, whereas the index has not covered the Maldives.
Although Nepal’s performance in the South Asia remains strong, it lags behind in the global index – which covers some 157 of the 193 UN member states – securing 105th position with an overall score of 61.6, according to the report. "The score indicates the country, on average, has travelled 61.6 per cent of the way towards attaining all the SDGs."
Although the latest report has placed Nepal in a better position than many other South Asian nations in terms of proximity to the global goals, the country still needs to make lots of efforts to meet targets related to ending hunger (Goal 2), promoting good health and well being (Goal 3), ensuring access to affordable and clean energy (Goal 7), and promoting decent work and economic growth (Goal 8), says the report jointly prepared by the Bertelsmann Stiftung, a German social responsibility foundation, and the Sustainable Development Solutions Network, a group that works with the UN to promote the SDGs.
Nepal also needs to put in lots of effort to build resilient industry, promote sustainable industrialisation and foster innovation (Goal 9), create sustainable cities and communities (Goal 11), and promote peace, justice and strong institutions (Goal 16).
The report acknowledges that poorer countries, like Nepal, tend to be closer to the bottom of the rankings, as they lack adequate infrastructure, and the mechanisms needed to manage key environmental issues that are the focus of other SDGs.
Also, rich countries tend to generate adverse 'spillovers' that hinder the ability of poorer countries to achieve the SDGs. "We assume that all high-income countries should aim for the internationally agreed threshold of providing 0.7 per cent of gross national income (GNI) in official development assistance,” it adds.
SDGs – a follow-up on Millennium Development Goals (MDGs), which expired at the end of 2015 – are a set of 17 goals and 169 targets covering a broad range of sustainable development issues. These goals have to be achieved by all UN member states by 2030.
One of the primary objectives of SDGs is to end poverty and hunger from the world. The SDGs also aim at promoting well-being of all the people, sustainable industrialisation, inclusive and sustainable economic growth, and employment and decent work for all.
Likewise, reducing inequality, making cities inclusive, safe and resilient, ensuring sustainable consumption and production patterns and taking urgent actions to combat climate change and its impacts are other goals.
The SDGs also aim at bridging all forms of inequality, raise access to basic public services, ensure access to justice and promote sustainable economic development. “For example, the high consumption levels, banking secrecy and tax havens, and weapons exports, by the rich countries may severely inhibit sustainable development in poorer and more vulnerable countries,” reads the report.
It calls for considerable global assistance to supplement national leadership, says the report. The assistance, according to the report, should come in many forms: foreign direct investment, global tax reform to enable the poor countries to fight tax evasion by international investors, technology sharing, capacity development, and more official development assistance.

13th periodic plan misses most of the targets

Lack of a coherent framework while preparing an approach paper for the plan and persistence of political instability and policy inconsistency coupled with unprecedented natural shocks and a massive erosion of implementation capacity have resulted in the 13th periodic plan failing measurably and missing most of its targets.
The plan – that is coming to an end by July 15 – has only achieved targets that can be counted on one's fingertips during the plan period spanning the last three fiscal years, according to data from the National Planning Commission (NPC).
According to former member of the NPC Swarnim Wagle, the 13th periodic plan lacked basic maturity of preparation, raising a question mark over how realistic the targets were. "Likewise, the last three years also saw three different governments in a continuation of the political instability that contributed hugely to policy inconsistency," he said, adding that unprecedented shocks such as the devastating earthquake and the Indian blockade also played havoc with the targets. "The erosion of implementation capacity was likewise a key factor in missing most of the targets of the periodic plan," he added.
The 13 periodic plan – that commenced in fiscal year 2013-14 – had a target of preparing the base for the country's graduation to developing country status by 2022 from the current status of Least Developed Country (LDC). In preparing the base for the graduation, the plan targetted achieving 6 per cent economic growth on average in the three-year plan period. However, the government has failed to achieve the growth target as the average economic growth rate plunged to 2.92 per cent, according to the planning commission.
Reviewing the 13th plan, NPC vice chair Dr Yubraj Khatiwada said that the transitional plan has failed to achieve not only the economic growth target but also a host of other targets, including inflation reduction, average employment rate growth, poverty reduction, access to electricity, generation of electricity, drinking water supply and sanitation, enrollment in primary schools, irrigation and road connectivity.
"Though increased government spending in the social sector has helped achieve some of the targets under the Millennium Development Goals (MDGs), low implementation capacity and absence of elected local bodies have made the achievement of the targets impossible," Khatiwada said, adding that low economic growth and less employment opportunity have left the country still more dependent on foreign employment.
The planning commission had targetted an annual increase of 3.2 per cent on average in employment in the last three fiscal years, but the achievement has been stuck below target at 2.9 per cent. Likewise, the plan has missed the poverty reduction and inflation targets. The plan had a target of bringing the poverty rate down to 18 per cent from 24.2 per cent but the current rate of poverty stands at 21.6 per cent, according to the panning commission. The government's failure in cracking down on spiraling prices has kept the average inflation rate at 8.8 per cent, which is above the plan target of 7 per cent.
Khatiwada attributed the misses to the devastating earthquake and border disruption that helped squeeze economic growth in the current fiscal year. The plan has, however, surpassed the targets in telephony penetration, including mobile phones, and in the area covered by forests. "The increase in telephony penetration has nonetheless failed to contribute to economic growth," Khatiwada added.
The 13th periodic plan was the third three-year interim plan following the second democratic movement that overthrew the monarchy and made Nepal the youngest republic in the world. Earlier, the planned development process that started some six decade back had been under five-year periodic plans, till the 10th plan.

Nepal fails to reap digital dividend

Nepal has failed to reap digital dividends, according to the vice chair of the National Planning Commission (NPC) Dr Yubraj Khatiwada.
"Expansion of technology has failed to boost the productivity of Nepali people," he said, releasing a World Development Report 2016: Digital Dividends' in Kathmandu today.
Nepal has 103 per cent telephony penetration and 50 per cent internet penetration, Khatiwada said, adding, "however, the access to technology has failed to boost productivity and contribute to the economic growth."
The World Development Report 2016 delves on digital dividends. "The Digital technologies have spread rapidly in much of the world," it reads, adding that digital dividends that is, the broader development benefits from using these technologies have lagged behind. "In many instances, digital technologies have boosted growth, expanded opportunities, and improved service delivery. Yet their aggregate impact has fallen short and is unevenly distributed."
Khatiwada was also of the view that Nepalis failed to reap the digital dividends despite huge digital penetration and expansion. "It could have helped efficient public service delivery and increase productivity," he said, highlighting that the increasing engagement on social sites has helped massive outflow of money from the country, instead of increasing productivity.
The report has also stressed that investment in the information and communication technology (ICT) sector should be matched by reforms in complementary areas like regulatory environment, labour market and governance, to foster economic growth, create more jobs, reduce income inequality, prevent rise of monopolies and reap maximum digital dividend.
With increasing digital technologies including internet and mobile phones, the number of mobile phone and internet users is also going up globally, according to the report that has claimed that the people, businesses and governments are more connected than ever before, creating a profound sense of social connectedness and global community.
However, Khatiwada, on the occasion, gave examples of some villages in Nepal, where farmers are taking help of mobile phones and internet to check weather for harvesting. "The farmers in some parts of Nepal are using technology to be update on weather for their crops," he said, without elaborating. "They have been also using technology to get real time market price of their agriculture produces," the vice chair added.
But increase of technology has also exposed people to various risks, Khatiwada said, adding that the cyber crimes have been increasing in recent years. "But these are the international issues, and a country like Nepal cannot fight alone."
He also suggested fighting unitedly against such international crimes.
"Although digital technologies, in many instances, have boosted growth, expanded opportunities and improved service delivery, the report reads, adding, "their aggregate impacts have so far been smaller than expected’ and ‘are unevenly distributed’.
“For digital technologies to benefit everyone everywhere requires closing the remaining digital divide, especially in internet access,” it adds.
"The unfinished task of connecting everyone to the internet – one of the targets of the Sustainable Development Goals (SDGs) – can be achieved through a judicious mix of market competition, public-private partnerships and effective regulation of the internet and the telecom sector,” adds the report. "But making internet service universal is not the only condition for fair distribution of digital dividends."
The report has also recommended countries to work on analogue complements — by strengthening regulations that ensure competition among businesses; by adapting workers’ skills to the demands of the new economy; and by ensuring that institutions are accountable to get most out of digital revolutions. "What these priorities highlight is that core elements of the development agenda – business regulations that ease market entry, education and training systems that deliver skills that firms seek, and capable and accountable institutions – are becoming more important with the spread of the internet."
It generally means ‘digital development strategies should be much broader than ICT strategies’, it added.
The report has also highlighted that the internet may have been automating tasks but workers may not have been possessing necessary skills, which is promoting inequality, rather than efficiency. "The internet may have also helped overcome information barriers but the government may have remained unaccountable, thus, leading to greater control, rather than greater empowerment and inclusion."
Countries should come up with regulations that allow firms to connect and compete; develop skills that technology augments rather than replaces; and create institutions that are capable and accountable to take full advantage of the opportunities the internet and other related technologies have presented, the report concluded.

UN body asks government to strike balance between fiscal and monetary policy to spur productive growth

A UN body has asked the government to strike balance between Fiscal Policy and Monetary Policy to spur productive growth.
Speaking at a function organised to unveil the report of 'Economic and Social Survey of Asia and the Pacific 2016' produced by United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) in Kathmandu today, economic affairs officer at the Macroeconomic Policy and Financing for Development Division of UNESCAP Sudip Ranjan Basu said that the Monetary Policy alone cannot shoulder the growth and that the Fiscal Policy has become more important to boost and redistribute the growth. "Productive growth has been slowing in recent years," he said, adding that quality of labour, access to finance to SMEs, and poor infrastructure are hitting productivity. "Productivity could be increased, if the government manages to strike balance between the Fiscal Policy and the Monetary Policy."
The contrast in Fiscal and Monetary Policy has hampered the economic growth, the UNESCAP report stated, suggesting the government to boost under disbursement of allocated budgets, improve tax administration and compliance, and accelerate reconstruction activities through issuance of reconstruction bond. "The government for maximum utilisation of domestic resources in increasing productivity as the Official Development Assistance (ODA) from rich countries have been drying for various reasons,"
Analysing the findings of the report executive chairperson of the South Asia Watch on Trade, Economics and Environment (SAWTEE) Posh Raj Pandey, said a proactive Fiscal Policy could help speed up spending. "Smart and active Industrial Policy, ensuring investment climate, and social protection for transition class, could help poor out of the poverty line," Pandey said, adding that active and efficient governance is a must to ensure growth.
The report, one of the oldest reports coming from UN agencies, states that some 1.7 million people could be out of poverty, if the agriculture productivity could be increased.
The Asia Pacific report also stated that the region as a whole has experienced considerable slowdown in economic growth and productivity gains in recent years. "The Asia Pacific region's progress on poverty reduction is slowing, inequalities are rising and prospects of decent employment are weakening," it said, adding that productivity and Sustainable Development Goals (SDGs) are closely linked and investing in these goals will increase productivity and help economic growth.
The regional report has projected Nepal to grow by 2.2 per cent in the current fiscal year, which is the lowest in the region. However, the inflation that the report has projected is the highest in the region.
Catastrophic earthquakes in April 2015, subpar monsoon season that resulted in weak agricultural growth and recent strikes and disruptions of trade routes in certain parts of the country have hit the growth in the near term. In the medium-term, the report states, a trade agreement with the USA and also an agreement with India to develop two large-scale hydropower projects could spur growth in the coming fiscal years.

Nepal's per capita to reach $2,500

Nepal has projected a more than three-fold increase in gross national income (GNI) in the next one-and-a-half-decade.
Nepal, under its Sustainable Development Goals (SDGs), has projected a per capita GNI of $2,500 by 2030 from the current $772, according to the national preliminary report on Sustainable Development Goals 2016-2030, drafted by the National Planning Commission (NPC).
GNI measures income received by a country both domestically and from overseas, including the remittance earnings that migrant workers – living and working abroad – send back home. For many countries like Nepal, money coming in from remittances is an important source of national income, adding to their GNI.
The projection is also based on Nepal's plan to graduate to developing countries status by 2022 from the current least developed country (LDC) status, and middle income country status by 2030.
However, the government needs to invest – in the country – double of what it is investing currently and help grow the economy by 8 per cent every year, if it is to achieve the target of achieving almost four-fold income growth.
Raising the income level and eliminating absolute poverty is one of the key SDG targets, according to vice chairman of the National Planning Commission (NPC) Dr Yuba Raj Khatiwada. Though eliminating poverty is almost impossible, Nepal targets eliminating the under $1.5-per day absolute poverty, he said, adding that the population below the national poverty line could be brought down to 5 per cent in the next 15 years.
Ending absolute poverty in Nepal by 2030 is an ambitious target, particularly given the reversals caused by the recent devastating earthquakes. "In the next six months, the planning commission will calculate the cost and financing needs to achieve the SDGs goals, including poverty elimination and income growth," he said.
Currently, a quarter of the population – or some 24.8 per cent – in Nepal is under the absolute poverty line, according to NPC. The government will also start formulating budgets from the next fiscal year 2016-17, keeping in mind the need to meet the above targets.
"Resource generation from domestic and international sources, the implementation capacity and distribution mechanism have to be made robust," he added. "Rise in income and distribution along with social security are key to the SDGs."
The SDGs, a follow-up on MDGs that started from January 2016, is the blueprint of long-term development strategy with the socio-economic and environmental focus on 17 targets. "It also targets on increasing access, utility and quality of services," according to director general of the Central Bureau of Statistics (CBS) Suman Aryal.
The NPC has come up with long-term governance and rights-based visions to achieve the targets including ending all types of poverty, food security and sustainable agriculture development, quality education to all, gender equality, and women empowerment.
Among other priority areas are enhancing access to energy supply, change in consumption and production modality, fighting climate change and setting up effective, inclusive and accountable institutions for incorporating all in social upliftment.
The NPC has also developed indicators based on the country’s needs rather than adopting global indices. The Millennium Development Goals (MDGs) – 2000-2015 – had set targets at low levels, and as a result, maximum targets had been met. Although the country has witnessed a remarkable change in the people’s living standards under MDGs, qualitative growth is still a far cry. Stating the maternal mortality rate was reduced to almost half to 415 per 100,000 live births during the MDG period, the SDG plans to ensure proper health service to all.
The SGDs will focus on generating employment opportunities, justifiable distribution of social security schemes, education system up to secondary level, agricultural productivity and health services in particular. Some other goals include reducing inequality within and among countries, making cities inclusive, safe, resilient and sustainable, ensuring sustainable consumption and production patterns, and taking urgent action to combat climate change and its impacts.
These goals, which have to be achieved by 2030, have potential to change the face of the country as they focus on bridging inequality of all forms, raising access to basic public services, ensuring access to justice and sustainable economic development.
The SGDs have considered infrastructure development as a fundamental factor for sustainable development and have targeted increasing hydropower generation capacity to 10,000-MW by 2030 from 818-MW in 2014. It has also envisaged increasing the industry’s share in the GDP to 25 per cent from 15 per cent in 2014.
Meanwhile, Nepal has also started advocating for easier access to technology through Technology Bank. Lately, developed countries have reduced aid for LDCs, while copyright and patent issues have made it utterly difficult for countries like Nepal to gain access to technologies available in the developed nations. "It calls for better coordination and cooperation between LDcs and developed countries, so that all the SDGs can be met within the deadline," he added.

What is GNI
According to the World Bank, GNI is the sum of value added by all resident producers plus any product taxes – minus subsidies – not included in the valuation of output, plus the net receipts of primary income – compensation of employees and property income – from abroad.

Double GDP, investment key to Nepal's graduation

Nepal has to grow at the rate of 7 to 8 per cent – double from the current growth rate – annually not only to graduate to the league of developing countries by 2022 but also to graduate to medium income country by 2030 from the current low-income country status, according to economists.
Speaking at a day-long seminar on 'Envisioning Nepal 2030' organised by National Planning Commission (NPC) and Asian Development Bank (ADB) in Kathmandu today, they also stressed the need to focus on key competitive and comparative advantage sectors for structural transformation and acceleration of economic growth for the graduation.
Addressing the seminar, prime minister Khadga Prasad Sharma Oli said that Nepal needed a long-term strategic development plans and policies to graduate to the status of a developing country from the current least developed country (LDC) status.
Stressing on implementation of those mechanisms to achieve Sustainable Development Goals (SDGs) by 2030, he said that the country has to double annual investment, and build essential infrastructures like strategic road and railway networks, communication, and electricity. "We have shifted our attention and efforts and are gearing toward economic development and prosperity after promulgation of the new constitution," he said, adding that Nepal's unique geographical locations, abundant natural resources, biodiversity and landscapes that widen connectivity across the borders toward a self-reliant economy has been able to reduce poverty, achieve most of the Millennium Development Goals (MDGs) and make significant social development particularly in health and education.
After the promulgation of Constitution, the main task before Nepal is to empower the people through implementation of economic and social agenda enshrined in the Constitution, he said, adding that it would only be possible through structural transformation of existing economic and social institutions, production relations, and social values. "However, focus must be on addressing the crippling energy crises that hold key to unleash rapid growth of many industries, as well as on connectivity to reach all Nepali villages within the country, and the vast markets of the neighbouring countries."
The seminar provided a platform for all stakeholders to contribute and work for climate change, sustainable development activities and renewable energy resources.
Speaking at the seminar, ADB vice president Wencai Zhang hailed Nepal's intent to graduate from LDC status by 2022, and become a middle-income country by 2030, while achieving the sustainable development goals. "However, this calls for a credible vision and a strategy to achieve it by setting out policies, prioritising public expenditure and investments to build physical and human capital, improving governance and the business environment, building a competitive industrial base and enhancing regional cooperation and integration," he said.
Welcoming the guests in the seminar, vice chairman of the National Planning Commission (NPC) Dr Yuba Raj Khatiwada said that Nepal needs higher economic growth to reduce poverty by 2030. "We have to learn how to accelerate the growth from our neighbours," he said, adding that the government will formulate Development Strategy 2030 by incorporating inputs from the seminar.
"Nepal must step-up and sustain a growth in the range of 6 to 8 per cent per year to make meaningful headway in uplifting the living standard of people,” he said, adding, "To achieve this growth rate, we must ramp up capital expenditure and make sure public investment equivalent to 8.5 per cent of the gross domestic product is made every year to bridge the infrastructure deficit."
At the programme, participants and panelists suggested the government to chalk out a national development strategy on the basis of Nepal's competitive and comparative advantages. They also said that Nepal has been trapped in poverty also due to lack of diversification from subsistence agriculture to commercialisation. "The government should provide first movers incentive to encourage entrepreneurs to venture in new areas that can provide impetus to economic growth and create employment," they suggested.
On the occasion, finance minister Bishnu Poudel accepted that the government has a challenge to develop sufficient infrastructures that could propel economic growth.
The seminar is expected to chalk out a blueprint that will basically chart out strategies and action plans to raise Nepal’s per capita income by more than three folds to $2,500 by the next one-and-a-half decades, eradicate poverty and rapidly improve other major socio-economic indicators by ensuring social justice.
The National Planning Commission (NPC) will incorporate recommendations and feedback collected from the conference – where renowned domestic and international economists, policymakers and development experts including Bibek Debroy, Justin Yifu Lin, Joon-Kyung Kim, Ajay Chibber, Nagesh Kumar, Bindu Nath Lohani, Shankar Sharma and Swarnim
Wagle took active part – in preparing the final Vision 2030 document.

Nepal to become poorest country in South Asia

Nepal is heading toward becoming the poorest country in South Asia, thanks to the prolonged Madhes unrest and the Indian economic blockade.
Currently, Nepal is the third poorest country in the region after Bangladesh and India, according to the latest  World Bank report, which has not included Afghanistan, the newest member of the regional body, SAARC.
However, the current Tarai-Madhes unrest and Indian blockade are pushing almost one million more Nepalis into extreme poverty. They will be joining the nearly one million already nudged into extreme poverty by the devastating earthquakes of April and May.
According to a central bank report - 'Impact of India's unofficial blockade on Nepal's economy' - some 800,000 more Nepalis will be pushed below the poverty line due to the current Indian embargo. This conclusion is based on a study of the losses faced by agriculture, industry as well as the service sector.
Currently, one in almost four Nepalis (23.7 per cent) is under the extreme poverty line - living on  $1.25 or less per day - and one in two (56 per cent) is under the poverty line of $2 per day, compared to 43.3 per cent in Bangladesh and 23.6 per cent in India living under the extreme poverty line, and 76.5 per cent and 59.2 per cent respectively under the poverty line, says the report.
The current political impasse coupled with the devastating earthquakes is going to push around 2 million Nepalis under the extreme poverty line. This means the rate of poverty is going to increase by almost 7 per cent, according to former vice-chairman of the National Planning Commission (NPC), Deependra Bahadur Kshetry. “It could be even worse in reality, due to the severe impact of the current fuel shortage, especially cooking gas,” he added
The increase in poverty in a very short span of time - eight months from April to December - is going to render the country the poorest in the region, he said.
Worse still, the population in the Tarai-Madhesh is going to be the poorest in the country as they have lost their employment and remain barred from economic activity due to the unrest.
According to the Small Area Estimation of Poverty conducted by the Central Bureau of Statistics (CBS) in 2013, the districts that were once prosperous - including Saptari, Siraha, Rautahat, Bara and Parsa - dropped into the list of the poorest districts following the Madhes movement in 2005-06. These same districts are going to be hit hard again as the current Tarai-Madhes agitation has forced some 2,200 industries to close, leaving around 220,000 people unemployed, as per figures from the Federation of Nepalese Chambers of Commerce and Industry (FNCCI).
 “From being the poorest country in the region in 1990, Nepal had improved its position to the third poorest behind Bangladesh and India," according to the World Bank global poverty estimates that monitor trends and progress toward achieving the Millennium Development Goals (MDGs). but the world has moved on to Sustainable Development Goals (SDGs) from this year.
Nepal moved ahead of Bangladesh in 1999 and India in 2008.
The recent World Bank global poverty estimates update has assessed poverty using two internationally comparable poverty lines - $1.25 and $2 per capita per day. Both international poverty lines are converted to local currency using the latest (2005) Purchasing Power Parity (PPP) exchange rates.

South Asia lags behind despite huge potential

Despite huge potential, South Asia lagged behind compared to other regional groups, according to the experts.
There is immense economic potential in the region," vice chair of National Planning Commission Prof Dr Govind Raj Pokhrel said addressing a two-day regional consultation on 'Deepening Economic Cooperation in South Asia: Expectations from the 18th SAARC Summit' here in Kathmandu today.
Stressing on improving trade facilitation to boost intra-regional trade, he also highlighted on the potential of regional energy cooperation. The recent efforts of the government to promote energy cooperation with India are indication in the right direction, which could further facilitate regional energy cooperation, he added.
The programme – being organised as a side-event to the 18th SAARC Summit to provide useful recommendations to deepen economic cooperation in South Asia – was organised by South Asia Watch on Trade, Economics and Environment (SAWTEE), National Planning Commission and Federation of Nepalese Chamber of Commerce and Industry (FNCCI), in collaboration with
German Cooperation for Development (GIZ), CUTS International, India Council for Research on International Economic Relations (ICRIER), and Friedrich Eburt Stiftung.
President of FNCCI Pradeep Jung Pandey, on the occasion, provided an account of the barriers faced by the business community in conducting trade within South Asia. He also stressed the need to go beyond trade in goods and also look as how to exploit the untapped potential of the services sector.
More important he pointed out the need for greater economic as well as people-to-people connectivity in the region, and argued that normalised trade relation between India and Pakistan is necessary for South Asian Association for Regional Cooperation (SAARC) to move forward.
Inaugurating the programme, chief guest and minister of Foreign Affairs Mahendra Bahadur Pandey said that SAARC has long dreamed of deeper regional cooperation for economic growth and prosperity and has also undertaken initiatives to facilitate trade and investment, and improve regional connectivity. "However, several constraints like financial and investment-related, largely affect the efficient implementation of trade and transport facilitation measures," he added.
Expressing hope that SAARC would undertake necessary steps to promote intra-regional investments and attract foreign direct investments (FDIs), Pandey said that through the effective implementation of the SAARC Agreement on Trade in Services (SATIS), SAARC could see higher growth in the services sector.
Most countries in the region have failed to meet the Millennium Development Goals (MDGs), he said, emphasising that the SAARC Development Goals (SDG) should be aligned with the Sustainable Development Goals in line with the post-2015 development agenda.
He also highlighted the necessity to take mitigation and adaptive measures to address the threat of climate change, which is going to impact, among others, food security of the region.
Strengthening of regional cooperation on this front is essential, he said, expressing hope that the 18th SAARC Summit would be able to send across a strong message that SAARC leaders are ready to revitalise and implement all past initiatives undertaken by SAARC to deepen regional integration.
Likewise, an independent analyst from India Major General (Retd) Ashok Mehta, on the occasion, rightly highlighted the role of track-II approach in moving forward relevant issues to track-I. He spoke about the Kathmandu Declaration signed at the 3rd SAARC Summit, and how SAARC went against its original Charter to address the issue of peacekeeping, which was viewed as a security issue and was thus beyond SAARC mandate.
He also advocated for a collective regional stance on peacekeeping issues at the UN, through the formation of a regional consultative mechanism to discuss the issue at the political, academic and field level. "It would pave the way for enhanced economic cooperation," he added.
Despite the existence of SAARC, progress in deepening regional integration has been frustratingly slow and gains have only been modest, said executive chairman of SAWTEE Dr Posh Raj Pandey speaking as the chair of inaugural session.
Therefore, what is needed to move SAARC forward is political will and sincere commitments at the highest level, he said, adding that informal trade in the region being substantially higher than formal trade is testimony of policy-induced trade barriers, which need to be overcome to make SAARC a truly economically integrated region.
Importantly, he stressed the need to reinvent the regional development paradigm with inclusiveness.
Earlier, executive director of SAWTEE Dr Hiramani Ghimire welcoming the participants said that the regional consultation is an opportunity to discuss what can realistically be done to enhance economic cooperation in South Asia, and provide recommendations for the 18th SAARC Summit.
The two-day discussion will see more than 60 participants, including researchers, policy makers, private sector representatives and media from different South Asian countries are participating in the regional consultation.
They will brain-storm on issues like trade and transport facilitation, and transit; non-tariff barriers; trade, gender and technology transfer; India-Pakistan trade relations; intra-regional investment cooperation; and regional cooperation for energy security.

CBS to conduct Multiple Indicator Survey from February 21

Central Bureau of Statistics (CBS) is carrying out Nepal Multiple Indicator Cluster Survey-2014 on the condition of women and children in the country from February 21.

The survey to be carried out in support with UNICEF will collect data of 13,000 households, including women aged between 15-49 years and children below five years from 520 different clusters across the country, according to the CBS. The target locations would comprise of 126 clusters from three urban and 394 rural areas. Twenty five households would be included in each cluster.

According to UNICEF representative to Nepal Hanna Singer, the five-year interval of survey which had been conducted in 50 countries since 1995 has been reduced to three from this year. "Such a survey is being conducted in 40 countries, including Nepal, Pakistan, Vietnam and Kenya," she said, adding that the findings of the survey will contribute to monitoring the progress made by the concerned country to improve the condition of women and children as indicated in Millennium Development Goals (MDGs) to be achieved by 2015.

Female enumerators will be mobilised for interviewing women so that they feel comfortable discussing about their reproductive health and rights, the use of contraceptive, maternal and child health care, and domestic violence. Likewise, the questionnaire related to children will have immunisation, early child care and development, breastfeeding and birth registration. The survey also aims at finding out the situation of child nutrition, applying anthropometry to measure children's height and weight.
In addition to the target data, e.coli – a harmful germ found in drinking water – will also be physically tested in each household during the survey. It will be the first time that any national survey has included the test of e.coli in the drinking water that is the key cause of disease.

The survey that begins from the Kathmandu Valley on February 21 will be extended to all the five development regions and be complete within the next five months.

After the survey, a preliminary report will be prepared – by September – and the final report will be presented to the UN secretary general in March 2015.

Job creation critical for sustained economic progress for Nepal

Demographic trends show that Nepal needs to create 550,000 decent jobs every year, according to a report.

The number of young people of working age in Nepal is currently increasing by 550,000 a year, and by 2020 it will climb to 633,000 a year, the recent UNCTAD publication reported.

It also recommended that the new government rethink its growth strategy to ensure that growth creates employment opportunities for the young people – who are currently largely under-employed, or trapped in vulnerable, low-paid jobs – to improve the growth prospects of the economy.

The Least Developed Countries Report 2013, subtitled ‘Growth with Employment for Inclusive and Sustainable Development’, urged that there should be greater policy emphasis on employment generation as a central development objective. It also cautioned that otherwise, international migration or social and political instability may rise.

The Least Developed Countries (LDCs), including Nepal, face a stark demographic challenge, as their collective population – about 60 per cent of which is currently under 25 years old – is projected to double to 1.7 billion by 2050, stated the report. During the rest of the current decade, such poor countries would have to create around 95 million jobs to absorb new entrants to the labour market, and another 160 million in the 2020s.”
By 2050, one in four young people worldwide will live in an LDC, it said, calling for a break with ‘business as usual’ policies, and a shift toward policies aimed at spurring inclusive growth and the creation of more and better-quality jobs.

The report said that the globe’s 49 least developed countries, a category which includes Nepal, should take steps to improve GDP growth, via the generation of employment, particularly of decent work – work that pays a stable living wage and has safe employment conditions – and via investment to develop productive capacities – the capacities of economies to produce broader varieties of goods, and goods of greater sophistication and higher value.
For some years, UNCTAD has argued that improving productive capacities is the best, most stable long-term strategy for helping nations and peoples to escape poverty.

The Least Developed Countries Report includes key figures and trends which show that during the period from 2000 to 2012, employment growth in Nepal was 2.7 per cent per annum – a rate that surpasses the average population growth rate of 1.7 per cent, but has been well below Nepal's average GDP growth rate of 4 per cent in that period. “Like many other LDCs, Nepal saw more than a decade of what economists call ‘jobless growth’, it added.
Most working people in Nepal are employed in the agricultural sector. In 2013, it accounted for 71 per cent of total employment, down from 75 per cent in 2000. Industry accounted for 12 per cent of Nepal's total employment in 2013, an increase of two percentage points over the figure in 2000. Services accounted for 17 per cent of employment in 2013, also increasing its share in total employment by two percentage points. The figures revealed that structural transformation has been relatively slow in Nepal.

The report also cautions that while LDCs enjoyed relatively high gross domestic product (GDP) growth rates from 2002 to 2008, this economic progress did not translate into correspondingly increasing levels of employment.
Indeed, countries with faster GDP growth created relatively fewer jobs. However, economic growth which does not create decent jobs in sufficient quantity is unsustainable; and job creation without the development of productive capacities is equally unsustainable, the report contended.

Economic growth in LDCs has not been inclusive, and its contribution to poverty reduction has been limited, the UNCTAD report said. In addition, this growth has not generated enough ‘quality’ jobs – that is, jobs offering higher wages and better working conditions – especially for young people. In addition, people employed in vulnerable circumstances – those workers without formal work arrangements, decent working conditions, and adequate social security – still accounts for about 80 per cent of total employment in the LDCs.
Creating employment opportunities is critical because it is the best and most dignified route out of poverty, the report contended, adding that the primary employment challenge faced by LDCs is not unemployment, but rather the lack of inclusive growth and productive employment in sufficient volume to help the working poor. It is a major impediment to achieving the United Nations (UN) Millennium Development Goals (MDGs), and to plans to set the LDCs on a sustainable development path.
Finally, the report noted that he LDC population is not only growing rapidly, but is quickly urbanising. In the case of Nepal, the urban population is currently growing by 3.7 per cent each year, compared with a national average population growth of 1.2 per cent. It combination of factors makes the current decade critical for rectifying the employment situation in LDCs. At the same time as more of the LDC population than ever is entering the labour market, an increasing proportion of that labour force is working, or seeking work, outside the agricultural sector. A major problem with the current process of structural change in LDCs is that it cannot provide the surplus population released from agriculture with productive employment elsewhere, the report notes.

Online investment guide to Nepal

KATHMANDU: The Department of Industry and UNCTAD will launch on Thursday a web-based investment guide to Nepal. The iGuides platform (www.theiguides.org/nepal) provides investors online with updated and hard-to-find information on operating costs, wages, rents and taxes that can be inserted into an investor’s business model, as well as laws, procedures and useful contacts. The experiences of current investors in Nepal are also included. The iGuides replace UNCTAD’s previous practice of publishing paper investment guides for different countries, allowing significant cost and time savings and enabling governments to get the right information closer to the intended investor audience. Further, because governments are responsible for generating and updating content according to UNCTAD guidelines, the development of each country website within the iGuides platform ensures significant capacity-building in investment promotion.

ADB president inaugurates new Bhutan office, vows to support development

Asian Development Bank (ADB) president Takehiko Nakao said today that ADB is committed to working closely with Bhutan government and its people and ongoing efforts to broaden the economy should be strengthened.

Nakao was in Bhutan for the first time as ADB president and opened ADB’s office in the country. During his one-day trip Nakao met with prime minister of Bhutan Tshering Tobgay and finance minister and ADB governor Namgay Dorji and discussed economic and development prospects and ADB’s support for Bhutan.

He noted that Bhutan has enjoyed high economic growth and made 'remarkable progress' in reducing poverty and achieving the Millennium Development Goals (MDGs). However, he also pointed to the need for more work to help Bhutan diversify its economy, develop its private sector, and tackle youth unemployment.

At the office opening he launched a new ADB publication, Three Decades of Development Partnership, to celebrate joint ADB-Bhutan efforts to promote inclusive and sustainable development.

Nakao also traveled to view urban roads and water storage tanks that are part of ADB’s Urban Infrastructure Development Project. The $30 million project aims to help ensure sustainable development of two of Bhutan’s largest municipalities – Phuentsholing and Thimphu – and one regional centre, Dagana. The project is working to expand water supply, drainage and sanitation, improve urban roads, and strengthen urban management.

Bhutan has been a member of ADB since 1982. Since starting operations in Bhutan, ADB has provided around $340 million in loans and $140 million in grants to support development. Key projects have included rural electrification, power sector reforms, roads, and urban infrastructure.

ADB is also supporting hydropower development in Bhutan including the 126-megawatt Dagachhu hydropower plant which will send 500,000 megawatt hours of electricity to India, helping to alleviate power shortages there and generate key export revenue for Bhutan. The plant was the first cross-border project earns carbon credits under the Kyoto Protocol’s Clean Development Mechanism.