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Nepal
Please note: All linked documents are in PDF format
| Objective |
SO Number |
FY 2004 |
FY 2005 |
FY 2006 |
| Sustainable Forest and Agricultural Products | 367-001 |
1,900 |
2,637 |
3,192 |
| Health and Family Planning | 367-002 |
23,840 |
23,540 |
23,000 |
| Hydropower Development | 367-006 |
1,600 |
1,700 |
1,900 |
| Democracy and Governance | 367-007 |
5,611 |
5,224 |
5,400 |
| Ending Conflict and Expanding Democracy | 367-008 |
5,734 |
5,399 |
5,900 |
|
Total (in thousands of dollars) |
38,685 |
38,500 |
39,392 |
|
The Development Challenge: In the last 54 years, Nepal has made a remarkable transition from an isolated kingdom with limited basic services and infrastructure to a functioning constitutional monarchy. Progress has been notable: substantial road infrastructure; large decreases in child mortality and fertility rates; functioning ministries such as education, finance, and health; gains in agriculture, forestry, and literacy; and increased access to basic services.
The most pressing problem facing the country today is a rebel insurgency and its profound impact on Nepal's political and economic development and overall security. The Maoist insurgency, which began in 1996, found fertile ground largely in response to Nepal's poor governance, poverty, and exclusion. The initial pro-people approach, which won the Maoists converts among the disenfranchised, has mutated into a campaign of violence, lawlessness, intimidation, and destruction. More than 10,000 people have been killed by the Maoists and security forces, with the bulk of these deaths, almost 9,000, occurring since 2001. While the Maoists have adopted terror as an instrument of policy, human rights abuses are committed by both parties to the conflict. In addition to the human toll, the continuing violence drains budget resources, restricts delivery of services and prospects for socioeconomic development, and stifles economic growth. The conflict has inflicted combined estimated costs to national property and the economy of over $1.5 billion in the already-impoverished country.
On the political front, there are new reasons for concern given the King's February 1 dismissal of multi-party democracy, declaration of a state of emergency, suspension of fundamental constitutional rights, and detention of politicians, journalists, and human rights activists. This serious setback for Nepalese democracy risks eroding even further the Nepalese Government's ability to resist the Maoist insurgency.
On the economic front, government measures to improve the business environment, encourage investment, reduce avenues for corrupt practices, and improve the service orientation of key government agencies are progressing. In addition, Nepal joined the World Trade Organization in 2004.
Absolute poverty declined from 42% to 30% between 1996 and 2002, attributable largely to increased remittances from Nepalis living abroad. Nonetheless, Nepal remains one of the poorest countries in the world, with an annual per capita income of $276 and 38% of the population living below the national poverty line. Life expectancy at birth has increased but at 59 years, is still lower than its neighboring South Asian countries. The literacy rate is 54% nationwide. Population growth has fragmented land holdings and depleted forest resources, negatively affecting the livelihoods of the 80% of Nepalis that depend on agriculture for their livelihood. Maternal mortality is amongst the highest in the region. One of 11 children dies before they reach their fifth birthday - the majority during their first year. Moreover, Nepal is in the midst of a concentrated HIV epidemic. The World Health Organization/UNAIDS estimate that 14 Nepalese adults become infected with HIV in Nepal every day.
The United States has an interest in an economically and politically stable multiparty democracy in Nepal. Nepal serves as a geographic buffer between the world's two most populous nations in a volatile region. By supporting efforts to resolve the Maoist insurgency and addressing the underlying causes of poverty, inequality, and poor governance in Nepal, the United States is making an important contribution to fighting terrorism, promoting regional stability, and diminishing the likelihood of a humanitarian crisis.
The USAID Program: Since 1951 and through the end of FY 2004, the United States has provided more than $791 million in bilateral economic assistance to Nepal; U.S. contributions to multilateral organizations working in Nepal to date approach an additional $725 million, including humanitarian assistance. The principal aims of USAID programs are to promote peace through good governance and increased incomes, improve primary health care, curb population growth, improve democracy and governance, advance economic development, and promote the expansion of environmentally-friendly hydropower. All components of the USAID program support improved governance and mitigation of the root causes and major effects of the Maoist insurgency. Although government capacity at the central and local level is weak, the Government of Nepal (GON) works cooperatively with USAID to implement programs through numerous partners, primarily international nongovernmental organizations that work both directly and through local nongovernmental organizations.
Other Program Elements: Beyond the efforts described above, other USAID regional and central programs assist Nepal. USAID's South Asia Regional Initiative for Energy is actively involved in regional energy cooperation, and its South Asia Regional Initiative on Equity for Women and Children strives to eliminate the trafficking of women, violence against women, and child labor. Through a regional economic growth program, USAID/India granted the Kathmandu Metropolitan City Office funds to improve household and medical waste management through community mobilization and the training of policymakers. The Asia regional office dedicated to foreign disaster assistance enhances medical first response, collapsed structure search and rescue, and hospital preparedness capacities of emergency response agencies, thereby reducing the potential for earthquake damage and injury in the Kathmandu Valley. It also enhances regional cooperation between countries in the Hindu Kush Himalayan region to exchange flood information and data, develops adaptive strategies for flood and drought mitigation to enable basic and tangible reduction in vulnerability, and provides training in emergency management to nongovernmental organizations. The Democracy, Conflict and Humanitarian Assistance Bureau has provided Nepal with a pilot NGO-strengthening grant to improve the impact of NGO activities through organizational capacity building.
Other Donors: Donors provided roughly $147.8 million in grants and $143.4 million in loans directly to the GON during its 2003-2004 fiscal year, as well as approximately $230-$280 million to support Nepal's development outside of the GON budget. The United States is the second largest bilateral donor, after Japan, in terms of funds disbursed.
Other major bilateral donors and their principal areas of focus include Denmark (education, decentralization, governance, and environment), the United Kingdom (governance, rural development, health, and HIV/AIDS), Germany (rural and urban development and health), Switzerland (roads and rural infrastructure and technical training), Norway (hydropower, water, governance, and human rights), Netherlands (community development), Finland (environment and rural water), and Canada (civil society, environment, and gender).
The major multilateral donors include the United Nations Development Programme (local planning and governance, urban infrastructure, rural energy, and HIV/AIDS), the Asian Development Bank (governance, education, water, power, agriculture, and roads), the World Bank (education, roads, water, power, telecommunications, financial sector reform, and health sector reform), the European Union (urban development and education), and the United Nations World Food Program (food for work programs). Other multilateral agencies such as the United Nations Children's Fund, United Nations Population Fund, Joint United Nations Programme on HIV/AIDS, and International Labor Organization are also active in Nepal.
The donors coordinate closely in terms of both program coordination at the strategic level and developing common approaches for implementing development programs in the context of the Maoist conflict. Donors coalesced around these themes in the May 2004 Nepal Development Forum, although they differed on how much control to cede to the GON in terms of managing their funds.
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