KATHMANDU: Nepal’s efforts to accelerate economic growth and reduce poverty are being hampered by political instability, poor infrastructure and other critical obstacles, a study has revealed.

The study — Nepal: Critical Development Constraints — is a collaborative effort by Asian Development Bank (ADB), UK Department for International Development (DFID) and International Labour Organization (ILO), examining the main factors holding back Nepal’s development. Unstable political environment, poor infrastructure, labour market rigidities, bad industrial relations and inequitable access to opportunities have undermined growth.

Launching the report, finance secretary Rameshwor Khanal said that Nepal has been successful in maintaining a macroeconomic stability. But the growth target could not be achieved, he said adding that only policy reforms cannot accelerate growth. “The massive civil disobedience like frequent bandhs and strikes are bottlenecks in growth,” Khanal added.

There is a widening gap between the rural-urban populace and rich-poor that needs to be addressed with long-term, medium-term and short-term plans, the report has suggested.

It has also suggested stronger governance, accelerated infrastructure development, particularly in the power sector, road and irrigation sectors, labour market reforms and greater efforts to ensure that all sectors of society have access to assets, education and key social services. The report also cautioned the international community not to burden the government with excessive demands as it resources are limited and especially when the country is undrgoing political transition. It noted priorities for reform must be determined by the government and the Nepali people themselves.“Nepal needs accelerated inclusive growth to create jobs and maintain stability in the long term, but its difficulties are mainly to do with internal, structural issues and it can address these issues if the desire and political will is there,” said Ehsan Khan, ADB senior economist and the report’s lead author.

“To put Nepal on the path to inclusive and sustainable growth, the report makes a series of recommendations,” said Barry J Hitchcock, Country Director, ADB.

Sarah Sanyahumbi, office head of DFID Nepal, said that the report is expected to start a debate on what’s needed to accelerate inclusive growth in Nepal.