Post-quake Reconstruction: Donors commit to extend 75pc of funds

April 24, 2017

The Kathmandu Post, 23rd April 2017, Post Report, Kathmandu

Nepal may not receive all the funds pledged two years ago by donor agencies for post-earthquake reconstruction, as only 12 development partners have entered into agreements with the government till date to release 75 percent of the pledged amount.

Nepal hosted the International Conference on Nepal’s Reconstruction two months after a devastating 7.8-magnitude earthquake struck Nepal on April 25, 2015. During that conference, 24 foreign governments and multilateral lending institutions, like the Asian Development Bank and the World Bank, had pledged $4.1 billion in grants and loans to help Nepal’s reconstruction process.

Since then, agreements worth $3.1 billion have been signed, according to the Ministry of Finance (MoF). Of this amount, donors have pledged to extend $1.6 billion in the form of grants and the remaining $1.5 billion in the form of soft loans.

“We have not been able to exert pressure on donors to enter into agreements with us to extend the remaining 25 percent of the money as we have not been able to fully utilise the committed funds till date,” said a senior MoF official on condition of anonymity. 

This means that the lack of shovel-ready projects have prevented the government from inviting donors to formally express commitment to offer what they have pledged. “Therefore hances of the country receiving all the funds pledged during the conference are slim,” the official said. The list of countries that have not signed  agreements with the government to release the pledged funds are: Austria, Bangladesh, Canada, Netherlands, Pakistan, Saudi Fund, Sri Lanka, Sweden and Turkey. These countries had pledged $83.7 million, according to the MoF records.

Countries like Australia, Norway and Switzerland too have not signed any agreement to release the amount pledged during the summit. But, records show that they have disbursed funds to support post-earthquake reconstruction activities.

Australia, for instance, released $4.8 million in the last fiscal year, while Norway disbursed $2.2 million and Switzerland $7.7 million in the same year, according to the Development Cooperation Report (DCR) 2015-16 released this week.

“These countries supported reconstruction activities on their own,” the MoF official said. 

So far, only 12, or 50 percent of donors that had made pledges during the conference in 2015 have signed agreements with the government to release the funds.

India is one of the 12 donors and tops the list with a commitment to release $1 billion, of which $750 million will be extended in the form of loans and the remaining $250 million in the form of grants. Next on the list is China, which has expressed commitment to release $766.9 million in the form of grants. 

The World Bank, Japan and the Asian Development Bank have also signed agreements with the government to provide $300 million, $247.1 million and $215 million, respectively. Yet disbursement of these funds is very low. MoF records shows that only $154.4 million of the pledged amount have been released so far. Latest data on fund disbursement is not available.

“The low level of disbursement was the result of delays in the formation of the National Reconstruction Authority, [the apex body that is overseeing all post-earthquake reconstruction works] compounded by the obstruction on supply chain [caused by the India trade embargo],” says DCR 2015-16.