A senior official of the Asian Development Bank (ADB) in Nepal has said the 10-year-old Maoist insurgency has hit Nepali economy hard.
Country director of ADB in Nepal, S H Rahman
Country director of ADB in Nepal, S H Rahman (File Photo)
Country director at the Nepal Resident Mission of the ADB, Sultan Hafeez Rahman, said, “If the conflict is allowed to continue, there will be a lot more social and economic losses. Many more lives will be lost and many more people will be denied the opportunity to improve their livelihood,” AFP news agency reported.
According to ADB, in the 1990s, Nepal’s annual economic growth averaged around a healthy 4.9 percent but the escalating insurgency saw this drop to an average of 1.9 percent between 2002 and 2004.
“Given that this conflict is persisting, and that there are chances it might actually deteriorate, Nepal could lose significantly more than two percentage points of GDP (gross domestic product) per annum,” Rahman told the news agency.
“This has very serious implications for not just total GDP and its distribution but also for reduction in poverty in the country.”
Nepal cannot afford this loss with 31 percent of the population living below the absolute poverty line and with an average income of just less than 300 dollars per year, Rahman said.
Nepal needs to get economic growth and poverty eradication back on track, and this cannot happen without peace, he added.
An ADB report focused on the fall in development spending in Nepal as a way of measuring economic decline and concluded that in a “high conflict” situation, Nepal could see a GDP growth loss of 10.3 percentage points over the next five years. If the conflict continues at its current level, the growth loss would total 8.3 percentage points, according to ADB economists.
“Nepal could continue to be in a situation where there would be very little economic growth at all,” he said.
Rahman further said millions of dollars sent home by Nepal’s estimated 1.2 million migrant workers every year, which has been a saving grace for the country, cannot match the conflict-related loss.
The solution is simple, said Rahman. “A credible peace dialogue would restore investor confidence and boost markets.”
“Once this happens I think that economic activity will tick back. In a very short period of time it can reach growth rates of six percent or more and if they are serious, over a time horizon of may be 15 years, they can do as well in per capita terms as any South Asian country,” he said.