Three years on, cash crunch hinders post-quake reconstruction

by Sanjeev Giri, Chandan Kumar Mandal, Kathmandu

Managing resource for expediting the delayed reconstruction works appears to be a difficult task for the government as the third anniversary of the Gorkha Earthquake nears.

The White Paper on the Current Economic Situation of Nepal unveiled by Finance Minister Yubaraj Khatiwada on Friday says there is a shortfall of Rs100 billion to complete reconstruction of private homes, painting a bleak picture of the ongoing rebuilding drive. “There is the need for looking out for additional resource,” the white paper reads.

The document also shows mobilisation of foreign aid in the reconstruction sector does not remain up to the mark. Though the government has made a substantial progress in signing loan and grant agreements with donors, accounting for 75 percent of the $4.1 billion they had pledged during the International Conference on Nepal’s Reconstruction in June 2015, only 16 percent of the agreed amount has been disbursed so far.

Of the total pledge, $1.97billion is grant and $2.13 billion loan. According to the NRA data, the agreement reached with donors is for $1.55 billion grant and $1.51 billion loan. A fund worth $3.06 billion that has come under the government basket is both on-budgeted as well as off-budgeted. While the NRA itself can spend on-budget fund, the off-budget money is directly spent by donor agencies with permission from the rebuilding authority.

“This means the grant amount can also be directly channelled into a specific project, one of the reasons for the slow progress in disbursement of resource,” Yubaraj Bhusal, CEO of the NRA, said.

He further added that mobilisation of $1 billion pledged by India, the largest amount of aid committed by a single country of which 75 percent is the line of credit, is yet to begin. “This is a huge amount, which is also the reason behind the slow progress in resource mobilisation.”

According to Bhusal, the Indian government has agreed to provide $16.2 million grant to the United Nations Development Programme and the UN Office for Project Services Asia Region for socio-technical facilitation to rebuild 50,000 houses in Gorkha and Nuwakot districts.

The NRA has yet to sign agreement with nine countries that have already pledged support. According to Bhisma Kumar Bhusal, deputy spokesperson for the NRA, some of the deals are in reimbursement model wherein the government makes expenditure from its own resource and claims the amount from the donor later, another reason blamed by officials for the slow progress.

“There are cases of some of the expenditure not shown in NRA records,” Bhusal said, explaining the case of a Rs3 billion heritage restoration project in Bhaktapur carried out by Germany in partnership with the municipality. “The pledged amount is recorded in the NRA basket but not the spent sum.” The NRA has spent more than Rs100 billion on post-earthquake reconstruction and recovery efforts so far. In the fiscal year 2017-18, more than Rs47 billion from the government budget and funds from non-government agencies were spent, the NRA said in its second trimester progress review meeting last week.

While over Rs4 billion was spent in FY 2015-16, spending picked up pace in FY 2016-17 and the current fiscal 2017-18. According to the NRA statistics, Rs49.55 billion was spent last fiscal, which is likely to go up this year as Rs47.85 billion has already been spent in the first eight months. These expenses include government budget as well as other expenditures by non-governmental agencies in the field of post-quake recovery.

Though over Rs100 billion has been expended in reconstruction and rebuilding measures in the past three years, the reconstruction progress has gone at a snail’s pace. Since start, only 112,453 private houses have been rebuilt. As many as 376,027 private homes are under construction against the NRA target of rebuilding 400,000 in total by the end of this fiscal.

A total of 279,325 displaced families have received the second tranche of rebuilding grant; 65,504 have claimed the third and final tranche.

Rebuilding hassles

  • Government’s White Paper shows a shortfall of Rs100 billion to complete reconstruction of private homes

  • Only 16 percent of the total $4.1 billion pledged by donors for post-quake rebuilding has been disbursed so far

  • Mobilisation of $1 billion pledged by India, the largest amount of aid committed by a single country, is yet to begin