The government is holding the International Conference on Nepal’s Reconstruction on June 25 to seek financial assistance from the international community to rebuild parts of the country ravaged by the devastating earthquake of April 25 and its numerous aftershocks. The one-day conference, being held with a theme ‘Towards a Resilient Nepal’, will bring together ministers and senior officials from various countries and representatives of development partners, including the United Nations, the World Bank and the Asian Development Bank. In this regard, Rupak D Sharma of The Himalayan Times caught up with Finance Minister Ram Sharan Mahat to discuss agendas that the government plans to raise during the conference and hurdles facing the rehabilitation and reconstruction drive that the country plans to launch.

• How are the preparations for the International Conference on Nepal’s Reconstruction going on?

Preparations are going well. Various foreign governments and development partners have started sending confirmation about their participation in the conference. We have also prepared necessary documents that would be distributed during the conference; and security arrangements have also been made. During the conference, we will officially inform foreign governments and development partners about the damage and losses suffered by the country due to the earthquake and its aftershocks. We will also inform them about the effect of the disaster and our plans on building back better.

• What would be the turnout at the conference?

We have extended invitations to more than 60 governments, institutions and individuals. I think almost all of them would send their representatives to the event. So, we are expecting a turnout of over 300 people.

• There are rumours about a rift between the Ministry of Foreign Affairs and the Ministry of Finance after the latter took the lead in making preparations for the conference. Are they true?

I am not aware of such a thing. As far as I know, both the ministries are working in total harmony; and there is a perfect understanding between the two ministries.

• Earlier, you had said the government may ask foreign governments and development partners to write off a part of external debt to generate additional resources for reconstruction. Would such a proposal be tabled during the conference?

I don’t think we’ll table that proposal. This is because the country’s fiscal condition is sound and our debt repayment capacity is also very good. Besides, Nepal’s debt sustainability indicators are better than those of many other countries. However, we

can ask foreign governments and development partners to defer the debt repayment period. But this issue has not been finalised. Yet, we think this could be one of the ways to ease the country’s financial burden.

• So, how much of funding commitment is the government planning to secure during the conference?

We cannot say anything on it now, as it depends on foreign governments and development partners. We have identified our needs (of Rs 669.50 billion) for recovery and reconstruction through the Post Disaster Needs Assessment (PDNA) report. The PDNA document prepared by the government is of high quality, and donors can make pledges for financial aid based on the findings of the report. However, not all participants will be able to make a commitment during the conference because different governments have to follow different procedures prior to making decisions. So, some donors may take a little more time to make commitments. Also, we will not hold negotiations on specific projects and programmes with foreign governments and development partners during the conference. In other words, specific projects will not be discussed during the conference. Here, what should also be understood is that the government is not planning to raise the entire funds for recovery and reconstruction from donors. The government will make use of its own resources. At the same time, the private sector and various communities will also make contributions.

• How much is the government planning to spend on reconstruction in the next fiscal year?

We are yet to do a detailed assessment on it. But I think we will be spending over Rs 100 billion on reconstruction in the next fiscal. However, this is only an estimate. And we may even require more funds. We will make the figure public after we finalise the budget document for next fiscal. However, much will depend on revenue forecast for next fiscal and commitment from foreign governments and development partners. On top of that we also need to assess the government’s capacity in programme and project implementation in the next fiscal.

• And what would be priority areas for reconstruction in the next fiscal?

We would give priority to reconstruction of school buildings, hospitals and health centres, individual houses, government offices, roads, irrigation projects, drinking water facilities and cultural monuments.

• You just mentioned the size of the reconstruction budget will also depend on government’s capacity in implementing various programmes and projects. Do you think the government can enhance its fund absorptive capacity and timely implement projects in the next fiscal?

We have to strike a balance between popular aspirations and the government’s ability to mobilise resources and execute programmes and projects. In the meantime, the government is trying its level best to raise the absorptive and project implementation capacities. This year I allowed various government bodies to make commitment for multi-year programmes and projects. (Under this facility, budget for projects that could take multiple years for completion would be automatically allocated every year once the project is approved.) This was done to expedite project implementation. We will start seeing results of this facility from next fiscal. At the same time, we are devising methods for faster project execution. In this regard, we are planning to form an authority to execute reconstruction works. This authority will be given the power to take quick decisions to ensure timely execution of projects.

• Many have been talking about the government’s weak fund absorptive capacity for over a decade now. You have also served the country as the finance minister for six times. Yet, why hasn’t the government been able to effectively address this problem?

Political instability has taken a toll on project implementation. With the change in governments, there is change of guards in ministries and other bodies. This has caused erosion in the project execution capacity. So, rapid change in governments, instability in administration and frequent staff turnover have affected project implementation. I have watched these incidents very closely and these problems tend to affect quality of projects as well. Also, there are problems in delegation of authority by heads of various bodies. For instance, the Ministry of Finance delegates the power to various ministries to spend the allocated budget on the first day of the fiscal year. But the same is not true with other ministries. And if there is delay in delegating power to spend, project implementation will obviously be delayed.

• Government is planning to form an authority to oversee reconstruction due to these problems in the system. Does this mean the authority can guarantee faster project implementation?

I am sure about this because the authority will be powerful enough to make various decisions to ensure timely project implementation. It will also be allowed to bypass certain procedures and even change implementation modalities or mechanism if the traditional modalities or mechanism have stopped functioning properly. For instance, if the government agencies are not making proper deliveries, it can easily approach the private sector or non-governmental organisations to implement the projects. If such a powerful authority is put in place, everybody will be on their toes to complete their works on time.

• And what if the authority fails to deliver even after delegating all these powers?

Let us not speculate too much on negative aspects. We are forming the authority with good intention. Besides, there has been improvement in project implementation and fund disbursement this fiscal year. I hope the reform measures that we have taken will further improve project implementation next year.

• But project implementation always suffers because no official is held accountable for failing to make use of the allocated budget. In this regard, the Ministry of Finance was planning to introduce Budget Management and Fiscal Accountability Act. Why is this process being delayed?

So many drafts of various Acts are pending in the Parliament. They have not been endorsed. So, framing the drafts of Acts cannot solve everything, unless they are passed.

• But promulgation of the Act would provide a legal tool to make officials accountable, isn’t it?

Yes, that is true.

• Another problem in project implementation is lack of elected representatives at local bodies. When is the government planning to hold elections at the local level?

The incumbent government wanted to hold local elections this year. But we could not do so because we failed to build a political consensus on it. It was actually opposition parties that were against the idea of holding local-level elections. But now we have reached an agreement with opposition parties on the matter. So, I think we will be able to hold these elections in coming winter.

• Lastly, many are saying the government should use this opportunity to enhance resilience of areas that were not affected by the recent disaster. What is your take on the issue?

Of course we’ve to do that. We need better plans to enhance resilience of all cities and villages. But this is a long-term proposition, whereas our immediate need is to rebuild areas destroyed by disaster. So, our priority for the moment is to reconstruct parts of the country ravaged by the quake. Also, if we focus on everything at the moment, we may end up doing nothing. But this should not mean we should not chart out long-term plans for areas other than those affected by the quake.