Haoliang Xu

The country is in the process of graduating from the status of a least developed country to the league of developing nations by 2022. But the earthquakes last year and the recent border blockade, crippled the country’s economy. As a result the number of economically vulnerable people has increased. To graduate to a developing nation Nepal needs to meet at least two among the three goals — Income Threshold, Human Assets Index and Economic Vulnerability Index — set by the United Nations. Haoliang Xu, UN Assistant Secretary General, says that the country will be able to achieve the target within the stipulated timeframe if the recent shocks do not cause structural problems in the economy. During his recent visit to Nepal, Haoliang spoke to Pushpa Raj Acharya of The Himalayan Times on Nepal’s graduation process, the reconstruction drive and overall development issues.

Recently, Nepal faced several setbacks like the earthquakes of April and May, and the border blockade that crippled the country’s economy. In this context, will Nepal be able to achieve the goal of graduating to the league of developing nations by 2022?

Graduation from the status of a Least Developed Country (LDC) is Nepal’s national goal. Nepal has been able to perform very well in two of the criteria, Human Assets Index (HAI) and Economic Vulnerability Index (EVI), among the three goals set by the United Nations (UN) to graduate to the league of developing nations. We have to analyse whether or not the recent shocks have created structural impact on the country’s economy. I think it is possible for Nepal to achieve its goal within the stipulated timeframe, but it is quite challenging because the per capita income is still at around only $750. And it requires at least seven per cent growth in per capita income over the next six years to meet the threshold. In this context, I think the numerical graduation can be achieved but the country might face a lot of vulnerabilities. And if the country thinks it is not well prepared for graduation, it can request the UN to extend the preparatory period. Samoa can be taken as an example. On Samoa’s request, the UN extended the transition preparatory period by three years after the country was hit by a devastating tsunami in September 2009. And the country graduated from the LDC category in January 2014. At the same time, another critical aspect is to see how Nepal can achieve the universal goal — Sustainable Development Goals (SDGs) or 2030 Agenda for Sustainable Development — that is more important and a bit more contextual. The reason is because some of the goals for graduation coincide with the SDGs. We need to thoroughly look at the long-term objective because if we look at graduation criteria of Income Threshold, HAI and EVI, then all these issues are covered by the SDGs.

You mentioned that to achieve the per capita income threshold the country needs at least seven per cent growth in per capita per annum for the next six years. To realise this goal Nepal would have to invest at least $7 to $8 billion annually over that period. Do you think the country will be able to mobilise the resources?

Before delving into the issue of mobilising the required resources, the country needs to resolve some underlying problems like political instability. The frequent change in government and subsequently the change in senior government officials have been creating hassles in policy implementation, ultimately hurting the development process. This is primarily the responsibility of national political parties. Secondly, the country should have a development strategy with long-term goals as well as interim and medium term targets. In this way, the long-term development vision will not witness frequent changes. Likewise, the country will have to achieve its goals to graduate to a developing nation and also the SDGs, which will not change regardless of the political changes. The other important aspect is that unless we have stable planning or investment climate, just investing in the economy will not give desired output. We need to look at comparative advantages of Nepal. There is a lot of potential in hydro and tourism resources that can be exploited for development. Similarly, Nepal has a lot of potential to increase productivity in agriculture if the country can introduce agriculture technology and irrigation. One of the major drawbacks that Nepal faces is the slow human resources development and skill development process. If the country invests in priority areas by improving the investment climate, then it can lure more foreign and private sector investment to achieve its target of graduation and also achieve the SDGs.

The 2030 Agenda for Sustainable Development has set 17 comprehensive goals and 169 targets. How can a country like Nepal localise it?

Nepal has already established a system of planning. During my visit, I found that the government has been working on long-term development strategy to achieve the SDGs. The government also has mid-term planning. On the basis of long-term planning, the government needs to formulate its annual budget through which the government can mobilise required resources to achieve the targets gradually. Similarly, the country also has district level and local level planning that can take into account the SDGs at the local level. So, to achieve the national goal all the concerned authorities must work together. I feel there are many opportunities and instruments to internalise SDGs.

The very first goal of the 2030 agenda is to end poverty by 2030. UNDP has been supporting Nepal to achieve this goal. How realistic do you think this is for Nepal?

During the period of Millennium Development Goals (MDGs) the poverty rate had been reduced from around 40 per cent in the beginning of 2000 to about 23.4 per cent at present. So, we can see that the country has been able to reduce poverty to a large extent and I believe Nepal will be able to achieve this target too.

The earthquakes of April and May last year and the recent border crisis have pushed a lot of people below the poverty line again. In this scenario, will Nepal be able to achieve the goal of ending poverty by 2030?

We can see that Nepal was able to reduce poverty by half during the implementation phase of the MDGs. And the fact is that the country was able to do so despite many difficulties like the Maoist conflict and political transition, among others. Nepal achieved other social development goals as well. Nepal has demonstrated the ability to achieve the goals. It has shown unprecedented national efforts to achieve the goals. While talking about reducing poverty to meet the target set by the SDGs, I want to talk about what it means for Nepal. If the country is able to reduce poverty by at least one percentage point per annum, the country will be closer to achieving the poverty goal by the end of 2030 and this is not very difficult. So I think it is achievable. To achieve these goals Nepal requires political stability, clear development strategy and also needs to attract private and foreign investment. However, external shocks like the earthquakes can push more people below the poverty line and that is a question of resilience. So when describing development, we talk about sustainable development. Disaster and climate resilience, and inclusive development can lead the nation towards sustainable development.

What do you feel are the factors that could hinder Nepal from accomplishing SDGs?

Nepal has different issues to look into like political instability, which I mentioned earlier. The country also needs to refurbish its institutional capacity to deliver the desired results. In recent years, the government’s capacity to utilise development expenditure has been a debatable issue. There are various bottlenecks in the system. The development partners also need to work together with the government to clear the bottlenecks and speed up the implementation process. And another critical issue is to make sure that international assistance to Nepal is used effectively. For example, the country received pledge worth $4 billion from development partners for post-earthquake reconstruction and rehabilitation in June last year. Because of various issues including political differences, the country failed to start reconstruction and rehabilitation works on time by utilising already available resources. Based on my observation progress of reconstruction is very slow. But what is encouraging is that the National Reconstruction Authority (NRA) is now operational and UNDP, World Bank and other development partners are working with NRA to develop Post Disaster Recovery Framework (PDRF). The PDRF is very important because we now need documents that include specific projects in different sectors to connect projects to funding so that we can go ahead to spend the resources smoothly. Along with this, robust monitoring is also required to expedite the post-earthquake reconstruction/rehabilitation works. But there are a few challenges ahead. For example, the monsoon is near which will interrupt the large scale reconstruction projects. If reconstruction activities are hastened, then it will also provide a boost to the economy. This, in turn, will have a positive impact to uplift economically vulnerable groups in quake-affected districts. So I want to stress political stability, efficiency in existing system and best use of available resources are vital to achieve SDGs.