The Asian Development Bank has extended an additional US$40mn in trade finance to Nepal to assist the disaster relief efforts, following the recent earthquakes.

An expansion of the ADB’s Trade Finance Programme (TFP), the finance will assist with the import of emergency supplies, mainly basic commodities such as food and medicine, as well as supplies related to reconstruction.

The ADB has confirmed to GTR that the funds will be available immediately through four Nepali banks – Himalayan Bank, Nabil Bank, Nepal Investment Bank and NIC Asia Bank, all of which have already signed up to the TFP.

Given that the nature of trade finance means it can roll over in less than 180 days, the ADB’s head of trade finance Steven Beck estimated that the total impact of the facility could reach US$80m over the course of the year.

The Gorkha earthquake killed more than 8,000 people in Nepal in April, injuring almost 20,000 more. The 7.8 magnitude shake was followed by a second major quake on 12 May, measuring 7.3 on the Richter scale and killing at least 117 more.

The ADB is working with the UN to assist with the damage and assess the financial requirement, with the latest rebuilding costs estimated to be between US$5bn and US$10bn.

“I understand the government is making a more thorough assessment of the impact of the disaster and its rebuilding requirements for presentation to the donor community so a more structured action plan can be formulated but I do not have a timeline for this process,” the ADB investment specialist Janet Hyde tells GTR.

Hyde explains that “the supply of food, water and electricity was restored almost immediately in the Kathmandu Valley area so we expect the logistics infrastructure is still operational even if it is not optimal”, but advises that it might be more difficult to reach more remote areas.

The customs office with China was severely damaged in the second major quake last week so trade with Nepal’s second largest trading partner may well be affected, Janet Hyde, ADB

The Nepalese Ministry of Agriculture Development this week estimated that the country would require 215,400 tonnes of food over the next quarter if it is to avoid food shortages in the most affected areas.

The ministry said that more than 135,000 tonnes of food in storage was lost in the quakes, including vital supplies of rice, maize, wheat, buckwheat, pulses, spices and seeds. On top of this, more than 50,000 cattle perished in the disasters, along with more than half a million chickens and ducks.

It’s estimated that more than US$100m worth of damage was inflicted on Nepal’s farming industry. For a country with a GDP of around US$19bn, this is a significant hit.

As well as the astounding humanitarian crisis the country faces, Nepal’s trade sector is expected to be severely damaged. Currently, around 50-60% of its foreign trade is with India and China. The level of assistance provided to Nepal by the Indian government post-disaster leads the ADB to believe that trade with India should continue relatively steadily.

However, Hyde says that it is unclear how much trade with China will be affected.

“Unfortunately, the customs office with China was severely damaged in the second major quake last week so trade with Nepal’s second-largest trading partner may well be affected. The country’s wider needs will be determined over the coming weeks and months by both the banks and their clients and suppliers and we can seek extension of this facility in light of such information,” she adds.