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Nepal Looks to Investors, Donors for Economic Revival

Nepal hopes the return of investors and donors will help kick start an economy stalled by years of political uncertainty. Ron Corben, who recently visited Nepal, reports that hopes are high that recent elections will put the country in a better position to benefit from high economic growth in neighboring India and China.

Nepal's economy has been ravaged in recent years as political uncertainty delayed infrastructure spending and kept foreign investors away.

Power shortages remain an almost daily occurrence and long lines greet drivers buying fuel.

A month after Nepal's election for an assembly to write a new constitution, attention is now turning to the economy.

Kunda Dixit, editor of the Nepali Times, says years of a communist insurgency and instability undermined the economy.

"It's because of the political instability the fact that no-one in power has been in power long enough to implement a lot of these economic plans on energy, on power, on water, this is jobs creation," said Dixit. "Investment is almost zero and there's been no major manufacturing or hydropower projects added to the grid."

Recent United Nations reports put growth in the landlocked nation at just 2.5 percent in 2007. The economy remains heavily dependent on the $1.5 billion in remittances coming each year from Nepalese working abroad. U.N forecasts expect growth to pick up to four percent this year.

But the U.N. warns the country will struggle to deal with rising prices for both food and fuel. Those price increases will be only partly offset by increased demand for Nepalese workers overseas in oil-exporting nations.

Jagadish Chandra Pokharel, vice chairman at Nepal's planning commission, says with the elections over, it is time for investors and donors to return.

He says there are several plans to revive the economy and get more people jobs.

"The immediate priorities - employment generation and how that could be done," he said. "We have largely worked out that there will be larger investment in infrastructure projects, which will immediately generate employment and kick start the economy."

One hope is that Nepal will benefit from the fast-paced growth of its neighboring economic giants, India and China. Editor Dixit thinks with the right infrastructure in place, combined with Nepal's other strength - tourism - the economy will make significant gains.

"We must lash our wagons to the two locomotives in the region - China and India - both growing at nine to 12 per cent a year - and I think these two locomotives will just drag us along," said Dixit.

Experts say if the government remains stable it should be able to increase infrastructure spending, and tourism should expand since the insurgency is over. That will mean solid economic growth that will allow Nepal to reduce poverty after years of uncertainty.