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Nepal Struggles to Rebuild One Year After Massive Earthquake: Financial System Unprepared for Disasters

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Written by Jubilee USA Network   
Monday, 25 April 2016 03:45
Nepal faces significant humanitarian challenges one year after its devastating 7.8 magnitude earthquake. According to the Red Cross, four million Nepalis still live in sub-standard housing. The earthquake killed 8,000 people and caused roughly $10 billion in economic damage.

"This anniversary is an important reminder that Nepal's people still need help," noted Eric LeCompte, executive director of the religious development coalition Jubilee USA. "Nepal was already a desperately poor country before the earthquake struck."

The International Monetary Fund (IMF) created a debt relief fund for poor countries in the aftermath of Haiti's 2010 earthquake that helped cancel Haiti's external debt. In February 2015, the IMF expanded the fund to include health crises and cancelled $100 million in debt for Ebola-impacted countries. Under the new fund, 38 of the world's poorest countries are eligible for relief in the event of a disaster or health crisis, including Nepal.

However, Nepal did not qualify for relief because its earthquake damage did not meet the fund's criteria. The quake impacted one-third or more of Nepal's people, meeting the first criteria, but failed to meet the second criteria because it did not cause damage equal to the size of Nepal's economy. According to the most recent World Bank numbers, Nepal owes $4 billion in debt, including more than $1.5 billion to the World Bank.

The World Bank since the Ebola outbreak has worked on a type of insurance fund to protect poor countries facing disasters or shocks. The World Bank still has not enacted the new policies.
"While the IMF deserves credit for its emergency fund, it's clear the criteria for relief needs to be expanded," said LeCompte. "The World Bank needs to implement new policies to address crises like this. The World Bank should start with Nepal."

Some Nepalis report aid money is still not flowing to disaster-impacted areas one year after the quake. Nepal lost $5.6 billion over the past decade to corruption, crime and tax evasion according to the anti-corruption think tank Global Financial Integrity.

"Corruption and debt have real human consequences in Nepal," stated LeCompte.‎

www.jubileeusa.org
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