King's Birthday Fiasco

King Gyanendra is the luckiest king of Shah dynasty to have lived for sixty years. Since King Prithvi Narayan Shah, no king has lived so long (and you thought Nepal's low life expectancy is due to poverty only?) Whether or not King Gyanendra will remain as the king is still in the hands of Constituent Assembly, but even as a general citizen he enjoys the right to celebrate his diamond-jubilee birthday and throw a party as per his wish. When the news about the king throwing party for over thousand people at a hotel in the capital spread like a wildfire, not many raised their brows. However, when all the "who's who of the society" started receiving invitations, some on behalf of Queen Aishwarya and some on behalf of Crown Prince Paras, the people got alarmed. The birthday party was suddenly considered as a royal ploy to taste the political clout of the king. Hence, rejection.

Diplomatic corps have proved their talent to sniff the political connotation of the king's invitation. The European ambassadors expressed their opinion collectively through British Ambassador Dr Andrew Hall that at this particular time their participation does not "send a helpful signal". Outgoing US ambassador James F Moriarty said his attendance "would not serve any useful purpose". Similarly, Indian ambassador Shiv Shankar Mukherjee had plain "not going" message to the king. These statements send a very powerful message in favor of Nepal's democracy and the Nepali people. The democratic world deserves a standing ovation from all those who embrace plural values and foster democracy. It is now almost certain that except for some exceptions, all other diplomatic missions will be busy sending RSVP to the royal palace.

The message is loud and clear. The king's resurgence is not possible in Nepal. Neither political party nor foreign forces nor the general public is ready to accept the king who imposed autocratic rule for over a year before bowing out to the pressure of people's movement on April 24th, 2006. The birthday party also exposed king's henchmen Swami Prapannacharya, Dr Durga Pokharel and others who have shamelessly drafted a citation terming King Gyanendra as the one who awarded democracy to this country, and as the only source of national integrity and stability. People certainly feel pity on such apologists. It is also an opportunity for the parties in the government to prove their stance on monarchy. Prime Minister Girija Prasad Koirala has rightfully and tacitly urged the king to quit, respecting the people's demand. He has also urged all the feudal fiats to support the constituent assembly election that would draft the constitution for a new Nepal. So, it is almost certain that the king's birthday party is going to be a fiasco.

Source: The Kathmandu Post, July 6, 2007

Essential Priorities

Prime Minister Girija Prasad Koirala presented the policy and program of the government for the forthcoming financial year in the interim Parliament, the other day. In the presentation made in the national legislature, Prime Minister Koirala accorded priority to improve law and order situation for holding elections to the Constituent Assembly scheduled for November 22. Prime Minister Koirala who heads the multiparty coalition government in which the Maoists are also represented reiterated that the top priority for country at the moment is the polls for constituent assembly which is expected to herald a new era of democracy and peace in the nation. Accordingly, the policy and program of the government announced by the prime minister has committed to set up a state restructuring commission by giving mandate to recommend modus operandi of reconstituting the governance mechanism and territory of the state. This would be an important commission as told by the prime minister, and its suggestions should facilitate the process for building a new constitution in the country.

Since the country has already braced for a federal polity, it is not yet clear on what type of provision with respect to federalism should be incorporated in the new basic law of the land to satisfy the aspirations of the people from different geographic, linguistic and ethnic zones. Moreover, in line with national need and priority, the government has committed to form a task force to recommend measures for ensuring proportional share of different marginal and excluded communities in the apparatuses of the state. This commitment of the government goes in line with the principle of inclusive democracy. What should be noted in this context has been the government resolve to rebuild and reconstitute the local bodies through consensual approach as, in the absence of representative and competent local government institutions, it is difficult for local democracy to foster. The government policy is progressive and, thus, aims at addressing the problems faced by the people from different walks of life. The announcement to raise the salary of the civil servants, focus on rural electrification, priority to commercialization of the farm sector, raising of the industrial security force and restructuring of the health sector are some of the social development measures that can go a long way in enhancing development of the country. However, provided that the implementation and monitoring drive is not revamped and toned up, the intended objectives enshrined in the policy and program of the government can not be translated into reality. In addition to strengthening mechanism for law and order, the democratic government should set sight on making the implementation mechanism better and stronger.

Source: The Rising Nepal, July 6, 2007

CA Polls: Definite Direction

FOR the first time since the formation of the interim government, Prime Minister Girija Prasad Koirala unveiled the annual policies and programmes of the government on Wednesday. It was expected as the budget is to be presented in a few days. Now the legislature parliament will hold discussions on it in the coming days.

FocusThe focus was basically on holding the constituent assembly (CA) election on November 22. It will be a landmark for the people and the country. Even Prime Minister Koirala has said that the day will herald a new era. Obviously, the expectations of the people are very high. But the preparations are yet to gather speed for the polls.There are many problems that have to be solved, though. A major issue is bolstering the law and order situation in the country. There are many agitating groups, some of which are involved in violence. On this score, the government has shown some seriousness, and attempts are being made to step up security measures. In this connection, the government is mulling over a new security policy, taking into consideration the situation in the country.Meanwhile, talks are being held with the various agitating groups, and it is hoped that an amicable solution will be reached as per their demands. This must be taken up seriously because without solving the simmering problems, the CA polls cannot be held in a peaceful atmosphere.

For this, the political parties, too, should extend their hands to the government. If they do so, the government will be facilitated in taking the necessary steps to maintain law and order. After a chill for some time, the eight political parties are working together, and there has been increased understanding among them. This solidarity and unity must be maintained till the polls. Though they may be contestants in the polls, the unity ought to be maintained so that the gains made so far does not go to waste.The appointment of envoys is still in a limbo as they were recommended by the earlier government. The main objection has come from the CPN (Maoist). They say that the recommendations were made without consulting them. On this matter, Maoist chief Prachanda had talked to Prime Minister Koirala, and it was agreed that the issue would be resolved soon.

As Premier Koirala mentioned in the government's policies and programmes, the culture of consensus and collaboration for resolving the differences through dialogue and negotiation has become a present day reality. And the country is going in this direction though at times stalemates have arisen.It is based on this that the country has come so far, starting with the agreement of the seven parties and the Maoists. The interim government and the legislature parliament are the result of the collaborative effort of the eight parties. This must not be allowed to break down on trivial pretexts.Whatever is taking place in the country is with the approval of the eight parties. Hence, blaming one or the other leader is not appropriate. Moreover, there are matters that have to be discussed behind closed doors. However, transparency must be maintained regarding the administration of the country. AwarenessNow all confusions regarding the CA polls are over with the announcement of the date. It is the duty of all the political parties to go to all parts of the country to make the people aware of the importance of the CA elections. This is important considering the fact that many people are still unaware as to why a constituent assembly election is necessary for the creation of a better Nepal. The rural parts are where the majority of the population lives and have a greater say in the political setting.

Source: The Rising Nepal, July 6, 2007

Times to come

The Interim Government (IG) on Wednesday unveiled its annual policies and programmes in the Interim Legislature-Parliament, making elections to the Constituent Assembly (CA) its focal point. Indeed, while other aspects declared in the document are important because they have an important bearing on various sections of society, the public interest in the CA polls, the core demand of Jana Andolan-2, is supreme, as it will affect the entire country politically, economically, socially and in other ways. The CA will lay the future basis for a new Nepal and is expected to institutionalise peace, democracy, justice and inclusiveness. Given its limits, the government cannot be expected to do a lot during the interim period. If it can manage the transition smoothly without putting unnecessary burdens on the people, maintain law and order, and provide some positive signs that indicate that the country is moving in the right direction, the policy statements should be seen in a favourable light.

Presenting the government’s policies and programmes, the Prime Minister said the document revolves round the November 22 CA polls and the national budget would have the same focus. He also said a supplementary budget would be unveiled after the CA polls. Koirala, alluding to the monarchy and stressing the importance of the CA elections, said that the vestiges of the old order would be swept away after the November 22 polls, which he said would herald a new era and the country would then turn over a new leaf. He declared, “This is the last battle. Let the remnants of the old order take to their heels and go wherever they want”. Koirala spoke of another revolution (change) after the CA elections — social and economic reforms. The Prime Minister’s statements concerning the monarchy, recorded in the sovereign parliament, assume added significance and hint at the shape of things to come. There are a number of signs that go to strengthen the Prime Minister’s assessment. The latest comes from the decision of important Kathmandu-based ambassadors to stay away from the King’s birthday reception.

As for the annual policies and programmes, it should be considered as the compromise document of the political parties represented in the interim government. Each may have its reservations. For instance, the CPN-Maoist has announced ‘critical support’ to it. Indeed, as Koirala said, the policy document and the budget may not satisfy everybody, though effort has been made to ‘touch all’. His message was that the Nepalis should have some more patience and make the CA polls their singular agenda. On this will depend whether the country will move into the bright or the dark future because the CA elections will mark the successful conclusion of the 10-year Maoist insurgency and the 19-day Jana Andolan-2 based on the 12-point agreement between the Maoists and the Seven Party Alliance. The alternative is fraught with serious dangers to democracy, peace, and prosperity, and above all, to the country’s very existence as an independent entity.

Source: The Himalayan Times, July 6, 2007

Foreign aid: Can it work for new Nepal?

Bishwambher Pyakuryal

Following the implementation of Foreign Aid Policy, 2002, grants have exceeded loans, projects have been prioritised, Poverty Reduction Fund has been established and Nepal has been receiving Poverty Reduction Support Credit. Similarly, aid has started to flow according to government priorities, though it is questionable if these are government’s independent priorities.The quality of aid has improved to some extent, especially after promulgation of the act. However, there are serious problems with management of such aid, including lack of proper recording, impractical conditionality and lack of transparency. A recent aid effectiveness study conducted by B P Bhattarai shows that both bilateral and multilateral aid can be effective in the long run. However, relationship between aid and per capita GDP has been found to be negative in both aggregate and disaggregated forms in the short-run, implying that the country suffers from lack of absorptive capacity and high aid volatility. This study can be complemented with other findings from the ADB, which show that while macro-policy environment and quality of governance have a direct bearing on poverty reduction, aid effectiveness is not critically contingent on them.Effectiveness rather differs under different environments, with differing quality of governance. On an average, aid is effective when it is moderate in volume. It becomes ineffective when its size exceeds the absorptive capacity of the target country. A cross-country empirical analysis by the World Bank conducted under Stephen Knack reveals that a high level of aid erodes institutional quality, increases rent-seeking and corruption, and therefore, has an adverse impact on growth.

It is recognised that aid helps economic growth in developing countries with sound policies and high quality public institutions. The problem lies with the compatibility of policy choice under different structural settings in conflict-prone countries like Nepal. Linking internationally practiced macroeconomic policies in assistance strategies without restructuring the institutional framework has backfired on development missions in Nepal.In fact, aid rarely manages to get things done which the countries could do themselves. Even with incredibly high aid inflows, poor countries are just as poor now as they were a decade ago. In most cases, aid has only fostered corruption and irresponsible policy-making. This is indeed the case with Nepal.

In Nepal, foreign assistance has not contributed to growth, especially with regard to its ability to supplement savings, foreign exchange and government revenues. The country’s failure to reduce aid and foreign borrowing by closing resource gaps has also not facilitated economic policy autonomy. The new government faces the challenge of reducing debt burden and increasing revenue by properly managing resource allocation under the proposed federal structure. Analysis of fiscal impact under a federal state should be our priority. Attention should go towards making aid money accessible to the poor, providing safe drinking water to villagers and guaranteeing poor children primary education.As external assistance has not been able to make a significant contribution to Nepal’s integration process, advocates of liberalisation have been disappointed. With billions of outstanding debt under the reform programme, Nepal has made a poor showing in public finance, price and supply situation, money and banking, international trade, transport and communications, agriculture and tourism, and social services. There is a big question mark on enhancing the competitive edge of Nepal’s development projects.A crucial determinant of competitiveness is productivity of key inputs. It is the key to improving national economic well-being by attracting domestic and foreign investors to the local economy. Nepal’s competitive advantage in lower wages is offset by low labour productivity. Out of 200 countries, the majority of Nepal’s indices in one of the top priority sectors, viz tourism, fall way behind other countries.

Nepal is characterised by red light in infrastructure, technology, human resources, openness and social index. This is the reason why revolutionary leaders in new Nepal should carefully assess trade-offs between assets and liabilities created by external assistance.Emerging from the ‘poverty trap’ does not necessarily mean a push for larger aid. It is also no guarantee that aid will increase productivity by bridging the ‘financing gap’. An increase in foreign aid and debt relief has not eliminated poverty in Africa. As much as 39% of Africa’s capital is believed to be held by those outside the continent. This clearly shows that investment depends upon the rate of return and increased bank lending. The need of the hour is to create an environment for investment where rates of return are higher than debt.

Source: The Himalayan Times, July 6, 2007