Tuesday, May 5, 2009

Nepal’s ambitious development plans under threat

Full marks to the chief economic adviser to the troubled Government of Nepal, Professor Sri Ram Poudyal, who was scheduled to make a presentation on the way forward for the Nepali economy at the ADB meeting today and went ahead with the seminar despite the rapidly-developing political crisis back at home.

I interviewed Professor Poudyal after his presentation and he admitted that the ongoing uncertainty would seriously impact the Nepali government’s ability to push ahead with its ambitious development plans.

As chief economic adviser to a government composed of Maoist former insurgents, he has the unenviable job of trying to marry double digit growth with a focus on promoting co-operatives and combating “feudalism”.

However, he stressed that the government was not taking a dogmatic approach to economic development and that its focus on distributive justice was not really a Maoist policy. “It’s what’s called equitable growth elsewhere,” he noted.

Nepal’s economy is seriously underdeveloped with, for example, the 70pc of the population that is employed in agriculture generating just 3pc of total GDP. Professor Poudyal wants to attract private sector and foreign investment as he strives to help the government transform the economy.

But this latest bout of political instability - described by some observers as the most serious crisis since the civil war between the army and the Maoists came to an end - will do nothing to convince investors that there money and faith is well place in Nepal.

After I had asked Professor Poudyal how he planned to generate rapid development while promoting communist policies, Xiaoyu Zhao, an ADB vice-president and former Chinese banker and finance official, jumped in briefly with a pertinent anecdote.

“In China we debated capitalism versus socialism for a long time but in the end we decided to go for economic development,” he said. “It doesn’t matter if it’s a black cat or a white cat so long as it catches the mouse.”

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