Kathmandu, Sept 25: Nepal’s interim government has rolled out a major relief and austerity package to address the massive damage caused after the September 8–9 Gen Z movement, which killed about 74 people and caused destruction worth nearly half of the country’s GDP.
Economists say the damage covers destroyed public and private property, lost jobs, and ruined documents, wiping out the equivalent of one and a half years of the national budget.
Businesses reported losses of about Rs80 billion, with tourism among the hardest hit. Over two dozen hotels were torched, including a Hilton property, causing Rs25 billion in damages. Around 15,000 direct jobs were affected, and business leaders warn that full recovery will take years without strong state support.
The finance ministry’s plan offers customs and excise duty exemptions for businesses replacing damaged equipment or furniture, based on verified insurance reports. Hotels that had used previous duty exemptions but faced losses will be able to access them again. Uninsured firms will be allowed simplified loss valuation to claim tax deductions. Contributions to the new National Reconstruction Fund will be tax-deductible.
Financial relief includes extended repayment schedules for loans in affected sectors and concessional reconstruction loans at base rate plus 0.5 percent. Businesses replacing destroyed transport vehicles will receive up to 80 percent loan-to-value financing. A Payroll Protection Scheme will provide subsidised loans to companies paying salaries through banks to prevent mass layoffs.
Insurance firms must make 50 percent advance payouts for insured losses based on preliminary surveys, while reinsurance mechanisms will speed up claim settlements.
Alongside relief, the government has begun a strict cost-cutting drive. Provincial and local projects with unclear objectives have been scrapped, new projects frozen, and budget allocations tightened. Contingency funds for large projects have been cut, allowances and housing funds removed for employees with homes, and hiring has been frozen except for essential technical staff. Temporary workers have been dismissed.
The number of officials allowed in government secretariats has been capped, foreign delegations reduced, and the use of government vehicles restricted. New vehicle purchases are banned except for election security. Luxury and non-essential electronic purchases have been halted. Government buildings and vehicles must now be fully insured.
To support recovery, government offices and tax agencies will remain open through most holidays except Dashain. Authorities say essential services such as education, health, and drinking water will be shielded from budget cuts.
Economists warn that the package is only a first step and its success will depend on timely and effective implementation to rebuild trust and revive business confidence.
(People’s News Monitoring Service)
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