World Bank : Nepal quake assessment shows need for major recovery efforts

KATHMANDU, June 16, 2015 — An assessment of the impact of a recent earthquake and major aftershocks shows that Nepal’s recovery needs amount to the equivalent of a third of its economy.  The damage to the economy will require sustained financial support and effective recovery programs to create a more resilient Nepal and to target support at those most in need, the World Bank said.

Reacting to the Government of Nepal’s announcement of the key results of its Post-Disaster Needs Assessment (PDNA), the World Bank said a donor conference on June 25 must provide Nepal with sustained support to repair the economic damage and to prevent more people from falling into poverty.

The PDNA prices the damage at US$ 5.15 billion, losses at US$ 1.9 billion and recovery needs at US$ 6.6 billion, roughly a third of the economy. Early estimates suggest that an additional 3 percent of the population has been pushed into poverty as a direct result of the earthquakes.  This translates into as many as a million more poor people.

“The economy of Nepal took a huge hit from these earthquakes and there is a danger that many of the country’s impressive gains in overcoming poverty could be reversed unless this challenge is addressed in a decisive way,” said Annette Dixon, Vice President for the South Asia Region at the World Bank. “The country needs resources to pay for the recovery that can be channeled through credible programs to make itself more resilient to the next natural disaster and ensure that those most in need receive the help they deserve.”

The conference on June 25 is organized by the government of Nepal to coordinate efforts among its partner governments and organizations involved in the reconstruction effort. The PDNA, led by the Government of Nepal and supported jointly by the Asian Development Bank, European Union, Government of Japan, United Nations and the World Bank, will inform the discussion by highlighting the extent of the damage to the economy – and suggesting how to help the country recover.

Given the short time within which the PDNA was completed, it provides rough estimates of the damages, losses and needs in each of the 23 sectors and themes it covers. This is sufficient to show the approximate overall damages, losses and needs, as well as the relative impact between sectors. The most heavily-impacted sector by far is housing, which accounts for about three-fifths of damages and half of needs. As the Government and its development partners transition from relief to reconstruction, more detailed assessments will be completed at the sectoral levels.

“The results of the Post-Disaster Needs Assessment show that reconstruction will be costly and time-consuming,” said Johannes Zutt, World Bank Country Director for Nepal. “To raise the money needed, there must first be clear plans on how it will be spent. To this end, the World Bank is working with the Government of Nepal to develop credible recovery programs that will be implemented with transparency and accountability for the benefit of those who lost the most from the earthquake disaster.”

The World Bank plans soon to announce a comprehensive package of support for Nepal. Subject to Board approval, this will consist of budget and financial sector support and finance for housing reconstruction in poor rural areas. The Bank is also planning to redirect money from existing projects and to set up a Multi-Donor Trust Fund (MDTF). The fund will help Nepal’s partners coordinate their financing in the reconstruction effort.

“As we prepare to extend this support to the areas of Nepal damaged by the earthquake, we will ensure that the development needs in other parts of the country continue to be met,” said Takuya Kamata, World Bank Country Manager for Nepal. “We also need to remember that for many people in Nepal the disaster is far from over. Humanitarian relief efforts remain critical and must continue with reconstruction.”

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