A lasting truce in the conflict with the Maoists will be the key to the resumption of multilateral lines of assistance to Nepal, ADB country head Hafeez Rahman told Emerging Markets. At issue is the “safe and effective implementation of our programmes” and if those concerns are addressed, then new commitments would be made to help the country’s fragile economy: “For the resumption of developmental activity in the long term it is imperative that a resolution is found to the conflict with the Maoists,” he said.
Following weeks of mass protests led by a seven-party coalition in Nepal, an interim government under prime minister G P Koirala took charge in Kathmandu last weekend. Its first task is to put in place a constituent assembly, and the Maoist rebels, who control large swathes of the countryside, have announced a three-month ceasefire to allow the new government to lay out its plans. The restoration of a democratically elected government in Nepal will depend on whether the Maoists can be persuaded to join it by putting down their arms and contesting elections.
The “frequent blockades” and difficulties faced by aid agencies because of the Maoist insurgency in the countryside had more or less frozen disbursements from ongoing assistance programmes, including those aimed at improving the country’s infrastructure, rural development, transport and water supply, said Rahman. Hopes that disbursement will be resumed immediately now that a new government is in place may need to be tempered.
“The donors are waiting for the new government to take charge, get its bearing and tell us what their priorities are,” he said. Ongoing assistance programmes in Nepal financed by the ADB total about $250 million, and together the multilateral agencies have about half a billion dollars in commitments to that country, he said.
India is also reportedly putting together an economic aid package to help ease the economic constraints faced by the new government in Nepal, the details of which have yet to be announced. These could include the release of an outstanding excise duty refund to Nepal and a move to delay payment of dues owed by Nepal to an Indian oil company.
A spokesperson for the Indian prime minister’s office, however, declined to confirm this. Sitaram Yechuri, a leader of the Communist Party of India (Marxist) who met Koirala in Kathmandu last week, said that the Nepalese leader is scheduled to visit India later this month when he is expected to put forth “concrete proposals” of an aid package.