Nepal Conference Hopes to Raise $6.6 Billion in Post Earthquake Aid
Debt Relief Could Be Part of Nepal Recovery Plan
World leaders gather in Kathmandu around Nepal's request for USD 6.6 billion in rebuilding aid after a series of spring earthquakes. United Nations Secretary-General Ban Ki-moon is attending June 25 negotiations where Nepal's 3.8 billion debt is on the table as part of an earthquake recovery package. Nepal spends $600,000 a day servicing debt, or more than $35 million since the first April earthquake.
"Nepal is requesting relief from some debt payments as a portion of the aid plan," said Eric LeCompte, Executive Director of the religious development organization Jubilee USA Network. "Nepal's government is being too careful to call for total debt cancellation because of misplaced worries that they'll scare off investors."
Nepal is one of 38 countries eligible for debt relief from the International Monetary Fund's (IMF) new debt relief trust fund. The IMF created the Catastrophe Containment and Relief Trust to relieve a country's debt payments when a natural disaster impacts a third of the country's population and destroys 25% of the nation's productive capacity. If Nepal qualifies for the trust, it could receive $23 million in debt relief of the $54 million it owes the IMF.
"Nepal's rebuilding efforts are a perfect example of why the International Monetary Fund set up this new emergency debt relief trust," shared LeCompte, who serves on United Nation finance expert groups. "We now need to see the World Bank and Asian Development Bank step up to the plate, as the two groups hold three billion in Nepal's debt."
Nepal owes $1.5 billion to the Asian Development Bank and another $1.5 billion to the World Bank. Jubilee USA Network is petitioning the World Bank to grant debt relief for Nepal and to create an emergency debt relief fund. The World Bank pledged $500 million in loans to finance Nepal's reconstruction.
Nepal was one of the world's poorest countries before the earthquake struck, ranking 145th out of 187 countries on the United Nations development index. The Nepali government estimates that the earthquake pushed an additional one million Nepalis below the poverty line. The quakes killed more than 8,600 people and destroyed over 500,000 homes, 8,000 schools and 1,023 health centers.
"Debt is a big reason Nepal wasn't prepared for this earthquake," LeCompte stated. "Going forward, it would be great to see debt relief be part of Nepal's recovery."
. Read more about the June 25 International Conference on Nepal's Reconstruction.
. Read more about the IMF's Catastrophe Containment and Relief Trust.
Jubilee USA Network is an alliance of more than 75 US organizations and 400 faith communities working with 50 Jubilee global partners. Jubilee's mission is to build an economy that serves, protects and promotes the participation of the most vulnerable. Jubilee USA has won critical global financial reforms and more than $130 billion in debt relief to benefit the world's poorest people. www.jubileeusa.org