Government called on to push for debt cancellation for Nepal

Humanitarian aid organisations are calling on the New Zealand government to advocate for the immediate and unconditional cancellation of Nepal’s foreign debt after the devastation caused by the April earthquakes.

Ian McInnes, chair of the NGO Disaster Relief Form, says NZ NGOs are adding their weight to a growing global call for debt relief in Nepal and have banded together to ask the Minister of Finance Bill English to advocate for debt cancellation and relief amongst other World Bank and IMF members.

The Nepalese government has an external debt of NZ$5.4 billion which it is obligated to repay at the same time as it is trying to provide emergency relief to its people and rebuild vital infrastructure.

The IMF has indicated it is considering its response, having recently provided around NZ$140 million debt relief to Guinea, Liberia and Sierra Leone following the Ebola outbreak.

The majority of Nepal’s debt is owed to the World Bank and the Asian Development Bank (approx. NZ$2.15 billion and NZ$2.6 billion respectively). A lesser amount (NZ$77 million) is owed to the IMF. Using this fund to relieve some of the financial pressure on Nepal could provide substantive help to the country.

Already ranked 145 out of 187 on the United Nations Human Development Index, the country is dependent on outside funding to provide relief to the estimated 2.8 million people in need of humanitarian assistance.

More than 500 thousand houses have been destroyed and half of that again are partially damaged. The demand for materials is pushing up costs while landslides and other damage are making it difficult to access some communities. The initial estimate is that it will cost nearly NZ$3 billion to rebuild homes, hospitals, government offices and historic buildings

Pauline McKay of CWS says humanitarian aid NGOs are concerned Nepal’s reconstruction will be overtaken by other pressing humanitarian demands. “To cancel Nepal’s debts would mean the freeing up of more than NZ$300 million dollars (annual debt repayments) for the rebuild, and for the investment in vital school and medical facilities.”

ENDS

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