Remittance help reduce poverty not government policy: UN human rights expert

Nepal's poverty has reduced not due to government policy rather with the help of remittance inflow, according to a UN expert.

"Poverty reduction owes more to remittances than to proactive government anti-poverty policies," the UN special rapporteur and extreme poverty and human rights, Olivier De Schutter, said today after conducting an 11-day official mission.

"A quarter of the decline in poverty can be attributed to outmigration only, with estimates showing that, without remittances, poverty would have increased in Nepal,” he said, adding that remittances in Nepal were 10 times larger than foreign aid and 2.5 larger than total exports only in 2017. "It is clear that much more needs to be done by the government to meet its own target of reducing multidimensional poverty to 11.5 per cent by 2023-2024,” the expert said, suggesting the government to ensure its skills and training programmes reach the poorest families. "While public works programmes such as the Prime Minister’s Employment Programme (PMEP) have considerable potential, in practice the programme has yet to deliver on its promise of providing 100 days of work per person per year. "In the country, 80 per cent of workers are informal, which exposes them to higher rates of abuse, largely because the government lacks the ability to enforce minimum wage legislation in the informal sector.|

Although informal workers should also contribute to and benefit from the Social Security Fund (SSF), there is currently no plan to include them in the programme, he added.

Nepal has one of the most progressive constitutions in the world, but many of its promises still are to be fulfilled, De Schutter, said, adding that Nepal has succeeded in reducing multidimensional poverty by 12.7 per cent between 2014 and 2019, and its Human Development Index (HDI) has improved, as have indicators related to health and education. "But significant gaps remain."

"Women are still lagging on a number of indicators," he said, adding that though banned, caste-based and ethnicity-based discrimination remain a reality in social life, and it is a major factor explaining the perpetuation of poverty. "Land issues remain unresolved, despite the efforts to accelerate the rehabilitation of former bonded labourers and to ensure landless Dalit benefit from land redistribution."

De Schutter’s fact-finding mission began on December 29, just weeks after the UN General Assembly voted a resolution inviting Nepal, along with Bangladesh and Lao People’s Democratic Republic, to prepare for graduation from the status of Least Developed Country (LDC) to that of an emerging economy. Nepal will benefit from a five-year transition period. “Graduation from LDC status is a major milestone for Nepal,” De Schutter said, adding that poverty reduction must be at the heart of the country’s transition strategy to ensure that no groups are left behind."

The UN expert met with communities who suffer from intersecting forms of deprivation. Most were landless daily wage labourers working in agricultural or informal jobs and struggling to send their children to school. Many were from historically disadvantaged and discriminated groups including Dalit, Madhesi, and Indigenous people, as well as women. “The stark inequalities resulting from the deeply entrenched norms and values of the Nepali caste system continue to perpetuate disadvantage today,” De Schutter added.

Women suffer the brunt of a historically patriarchal society, earning almost 30 per cent less than men, suffering from higher rates of informality, owning only 19.7 per cent of homes and land, and enduring a 17.5 per cent literacy gap compared to men, the UN poverty expert noted. "Nepal can and must do better,” he said.

Children experience the worst forms of deprivation because of the poverty their families face, he added. Over one million children work in Nepal, and in rural areas over a fifth of children do.

"During my mission, I met with countless families whose children, especially girls, engaged in agricultural or domestic work,” De Schutter said. "Wealth inequality is a major factor: over 20 per cent of children in poverty work, compared to only five percent of children from rich families."

“The government must take child poverty seriously and take the necessary steps to end child marriage and labor and improve quality of and access to education,” he added.

During his mission, the special rapporteur visited Bagmati, Karnali, Lumbini provinces, as well as Province 2. He met with nine ministries, including six ministers, as well as local and provincial authorities, people affected by poverty, civil society organisations, and development cooperation and UN agencies.

World Bank highlights resource gap to maintain federalism

The World Bank (WB) has concluded resource gap to maintain the three-tier government. Releasing a report, 'Public Expenditure Review (PER) Report on Fiscal Policy for Sustainable Development', the multilateral development partner also said the government should also introduce five key reform measures to support fiscal sustainability and its transition towards green, resilient, and inclusive development.

The World Bank, in its report, has also identified five top priority reform measures. It has suggested on encouraging the update of sub-national spending responsibilities through the intergovernmental grants system.

Supporting exports and job creation through reforms to import duties, strengthening domestic revenue including a review in VAT exemptions, enhancing public capital spending by rolling out the National Project Bank and providing fiscal incentives for a green growth transition are among measures that World Bank has recommended to achieve the goal.

The World Bank has also stated that Nepal has made significant strides in implementing fiscal federalism but excessive dependency of the sub-national governments on the intergovernmental transfers and revenue sharing, which accounts for around 30 per cent of the annual budget, to fulfill their financial demands.

“While federalism is helping bring policymaking closer to the people, it has also increased fiscal spending and exacerbated by the Covid-19 pandemic led to a sharp rise in fiscal deficits and public debt,” the report reads, stressing the importance of strengthening investment processes and fiscal policies for green growth, and fiscal policy reforms to enable Nepal to use its green electricity surplus to mitigate air pollution to protect the health of people and the economy.

With the country’s transition to federalism, expenditure responsibilities have been devolved to subnational governments that are predominantly financed through intergovernmental transfers and revenue sharing. These now account for between 8 per cent and 9 per cent of GDP per year (or close to 30 per cent of the annual budget). 

“This report provides an analytical basis to inform our reform efforts to strengthen federalism and create fiscal space to support our new focus on a green, resilient, and inclusive development (GRID) model,” finance secretary Madhu Kumar Marasini said, adding that it complements our ongoing efforts to refine the fiscal transfer system put in place the systems for monitoring and reporting for a more results oriented and accountable delivery of local services.”

Likewise, World Bank country director for Maldives, Nepal, and Sri Lanka Faris Hadad-Zervosthis said that the human development PER, both of which will help inform the design of World Bank support to Nepal, including through our ongoing support through our various Development Policy Credits."

JICA to support strengthening of seed production, supply and quality control system

JICA signed Record of Discussions with the government for the technical cooperation project 'Strengthening Seed Production, Supply and Quality Control System Project'.

The implementation period of the project is for 5 years (starting from March 2022 to March 2027) and the executing agency is Seed Quality Control Center (SQCC), Ministry of Agriculture and Livestock Development (MOALD), Nepal Agricultural Research Council (NARC), and Ministry of Land Management, Agriculture and Cooperatives (MoLMAC) of province No 1, according to a press note issued by the JICA.

The project shall be implemented in Province 1, mainly Jhapa, Morang, Sunasari and Udayapur districts, it reads, adding that the purpose of the project is 'to strengthen Rice seed production, supply and quality control system' to improve productivity of rice by means of dissemination of quality improved seeds in Province No 1 and to strengthen the implementation of the rice seed production, supply and quality control system in Nepal. 

Rice is fundamental crop of Nepali agriculture. Everyone eats it, and farmers gain income out of it. In order to make crop tasty, nutritious, and productive, the most important factor remains the quality of rice seeds.

Even though rice farming contributes around 15 per cent to the gross domestic production (GDP) of Nepal, there is still possibility to increase its yield therefore usage of improved seed and increasing the replacement rate of seed are the key.

According to the statistic, seed replacement rate of rice in Nepal is around 20 per cent now, therefore, the government has the strategy to raise the percentage to 25 per cent. And it is estimated that the use of improved seeds with good quality will increase its yield by 15 per cent. However, there are several processes before farmers can use the improved seeds with good quality, it is necessary to improve of the quality of the system and capacity to produce the quality seed in Nepal. In this context, holistic support for improving seed production was requested to JICA.

The project is expected to contribute for sustainable social and economic development of Nepal during and after the implementation period of the project.

Monetary Policy quarterly review gives continuity to CD ratio provision

The central bank has stressed on policy stability in the first quarterly review of the Monetary Policy 2021-22.

Releasing the review report today, the central bank has kept the cash reserve ratio (CRR), statutory liquidity ration (SLR) and widely critisised 90 per cent cap on credit to deposit (CD) ratio unchanged. The CD ratio has been blamed for current credit crunch. The bankers were asking the central bank and finance minister to revert to the earlier system of CCD ratio. The central bank, through Monetary Policy for the current fiscal year 2021-22, has scrapped the provision of credit to core capital plus deposit (CCD) ratio and mandated CD ration to be kept at 90 per cent. Most of the commercial banks have CD ratio over 90 per cent, restricting them to further lend. But the review has asked the banks to prepare a plan to contain CD ratio within 90 per cent by the end of this fiscal year, and submit it to the central bank.

Nepal Rastra Bank (NRB) has, however, tried to tighten the imports, which has seen whopping growth since last couple of months as the Covid-19 infection has been weak. The alarmingly rising imports has eaten up the foreign exchange (Forex) reserve as it has been depleting fast since last couple of months.

In a bid to address the declining forex reserves, the central bank has adopted different measures to discourage imports like making cash margin mandatory when opening LC, limit import of silver and simplify the process of bringing in deposits from Non Resident Nepalis (NRNs), reads the review.

Likewise, the central bank has also introduced a provision whereby commercial banks can issue collateral for loans in foreign currency for commercial agriculture, manufacturing industries, tourism and projects.

Projecting the pressure on external sector stability to continue, as the demand for credit is increasing due to economic recovery process and a large portion of such credit is being spent on import payments at a time when remittance inflow is also not decreasing, the central bank has tried to stop the forex reserve depletion.

Despite a huge pressure to lift cap from margin-type lending, the central bank has not reviewed 40 million and 12 million cap. The fall in share market has been attributed to the central bank's policy to put cap of Rs 40 million (for one financial institution) and Rs 12 million (from the overall financial system) in margin type lending. The provision was also brought in the Monetary Policy for the current fiscal year 2021-22. The share investors have been asking the central bank to revert the decision. However, the central bank, in the review, said that the provision will help financial sector stability and is necessary as the margin type loan has been projected to create bubble in stock market.

Likewise, the central bank has also projected that expenditure on local elections in the current fiscal year will further expand the demand for credit and put pressure on prices. It has also projected the economy to recover wisely citing that the impact of Covid-19 has been gradually diminishing, the availability of vaccines has increased, the number of people going for foreign employment has started increasing, foreign tourist arrivals have increased and that the export of electricity has started.

UML’s 10th national convention kicks off in Chitwan

After 7 years and 3 months from its 9th national convention, the main opposition party CPN (UML)'s started its 10th national convention in Chitwan today, though the law directs the political parties to regularly hold their national convention every five years.

The 3-day convention will conclude on Sunday by electing new leadership for the next five years.

Prime Minister Sher Bahadur Deuba alongwith key leaders of various political parties were present at the inaugural session of the convention chaired by the party chair KP Sharma Oli.

Communist Party of Nepal (Maoist Centre) chair Pushpa Kamal Dahal did not attend the meeting, and sent his aide Lilamani Pokharel to attend the convention of UML, which has not invited CPN (Unified Socialist) chair Madhav Kumar Nepal, who formed his own party after splitting from the UML following a long-standing dispute with the party chair Oli.

The convention is also being attended by some 15 foreign delegates from 16 political parties of various countries including India.

Party chair Oli inaugurated the 10th congress, where Prime Minister Sher Bahadur Deuba also attended.

Though, Nepal's political parties have been blamed for their heavy expenses without any source of income, the CPN (UML) has claimed that it has collected Rs 100 leby from its 850,000 members. "Rs 100 donation from each of our 850,000 members has totalled to Rs 85 million," the party claimed, adding that the expenses will be met from the collection.

The Election Commission, has however, yesterday asked all the political parties to make their expenses transparency. "The EC has developed a format for all the political parties to keep their expenses transparent according to Political Parties Act-2073, article 40," the constitutional body said in its notice yesterday. "The EC has approved some 8 forms for the political parties to keep their accounts transparent," the notice reads, adding that all the political parties must keep accounts according to the prescribed format also for the uniformity. "It will help maintain transparency in all the political parties."

The political parties have been questioned for their heavy expenses, as they have no definite income sources.

After 50 years, Nepal to graduate from LDC

After being in a category of least developed country (LDC) for five decades since 1971, Nepal is finally graduating to the developing country category as the United Nations General Assembly (UNGA) on Wednesday approved a proposal of Nepal's graduation to a middle-income developing country by 2026.

The 40th plenary of the 76th Session of the UNGA unanimously adopted a resolution endorsing the graduation of Nepal from the LDC category with the preparatory period of five years, according to press note issued by the Permanent Mission of Nepal to the United Nations in New York.

"As a result, Nepal will graduate from the LDC category by December 2026 and until then will continue to receive all concessions and support measures as LDC,” the press note reads.

In addition to Nepal, the graduation of Bangladesh and the Lao People’s Democratic Republic has also been endorsed by the UNGA.

Nepal now needs to prepare smooth national transition strategy, with the support of the UN system and in cooperation with their bilateral, regional, and multilateral development and trading partners. After the graduation from LDC category, a country will not get grant, and also loses preferences it is getting as LDC, thus pressuring for strong domestic production base.

After the adoption of the resolution, permanent representative of Nepal to the UN Amrit Bahadur Rai reiterated Nepal’s commitment to making all-out efforts for a smooth graduation with the enhanced level of support from the development partners, including the UN system. "Nepal graduating from LDC status in 2026 is a great milestone, indeed," he added.

But Nepal should make efforts that it won't slip backwards. Rai also pledged for Nepal to do its best to undertake all required procedures for its structural changes for the same within the next five years. "The Government of Nepal has completed strategic efforts for the graduation," he said, adding that it is an opportunity for the country to raise its image in the international forum by creating structures for its economy within the next five years. "We have also urged for addressing challenges that may emerge after 2026, and will reach a conclusion to this effect after holding a dialogue with development partners."

Nepal has twice deffered its graduation due to devastating earthquake in 2015 and lack of preparation in 2018. Usually, graduation from LDC status becomes effective three years after the UNGA takes note of the recommendation made by the Committee for Development Policy under the United Nations Economic and Social Council to graduate a country. But due to Covid-19 pandemic, this time, the countries have been given five years of preparatory period on an exceptional basis.

The five-year preparatory period, however, is provided for a smooth transition, recognising the effect of the Covid-19 pandemic and the resulting need to implement policies and strategies to reverse the pandemic’s damage to the economic and social sectors, the press note reads.

The resolution has mandated the Committee on Development Policy, a subsidiary body of the Economic and Social Council, to analyse the adequacy of the preparatory period at its 2024 triennial review and recommend further extension, if necessary, the press note adds.

In the last two triennial reviews conducted in 2015 and 2018, Nepal had met two of the three criterion related to the human asset index (HAI) and economic vulnerability index (EVI), though it couldn’t meet the per capita income (PCI) criteria. A country must have HAI more that 66 to graduate from LDC. But Nepal has scored 68.7 in 2015, 71.2 in 2018, and 75 in 2021. Likewise, a country must have EVI less than 32 to graduate. Nepal has scored 26.8 in 2015, 28.4 in 2018, and 24.2 in 2021.

A country becomes eligible to graduate from LDC after meeting two of the three criterion but a country can also graduate on the basis of per capita income alone, if it can meet the PCI creteria. The gross national per capita income of a country needs to be at least $1,222 for it to be accorded developing country status, according to the UN. But Nepal’s per capita income stands at $1,027 in 2021, whereas it had $745 in 2018, and $659 in 2015, according to National Planning Commission (NPC) data presented at the UNGA.

Australian ambassador hands over medical equipment to Bir Hospital

Australia’s ambassador to Nepal Felicity Volk provided medical equipment worth Rs 4.2 million to the Covid-19 Unified Central Hospital at Bir Hospital under the National Academy of Medical Sciences (NAMS).

The equipment, including Intensive Care Unit beds and other equipment, will be used to establish an emergency ward in the Covid-19 Unified Central Hospital, according to a press note issued by the Australian Embassy in Kathmandu. "As the Covid-19 vaccination campaign continues in Nepal, the Australian government is committed to supporting health security under our Covid-19 Development Response Plan," Volk has been quoted in the press note. "The plan focuses on providing assistance to the most vulnerable. With Nepal responding to multiple challenges simultaneously, the needs of marginalised communities are more evident than ever."

"Australia’s contribution of equipment through the Lutheran World Federation Nepal will strengthen Nepal’s health system and serves as a reminder of a close friendship over six decades, throughout which Nepal and Australia have supported each other," she added.

In May, the Australian government provided Aus$7 million to NGOs including the Lutheran World Federation Nepal (LWF Nepal) to boost Nepal’s ability to address Covid-19, including through the procurement of essential equipment and health supplies for hospitals and personal protective equipment for health workers.

Vice Chancellor of NAMS Prof Dr Dev Narayan Shah, acting chief executive officer of Covid-19 Unified Central Hospital, Prof Dr Bhupendra Kumar Basnet, and LWF Nepal country director Dr Bijaya Bajracharya were present on the occasion.