KATHMANDU: The Asian Development Bank (ADB) is set to provide Nepal with a concessional loan of USD 100 million to support the implementation of fiscal federalism, strengthen public financial management, and improve budgetary systems across all three tiers of government.
The loan will be provided under Subprogram–2 of ADB’s Strengthening Public Financial Management and Devolved Service Delivery Programme.
An agreement was signed on Wednesday at the Ministry of Finance between Finance Secretary Dr Ghanashyam Upadhyay and ADB Country Director for Nepal Arnaud Cauchois on behalf of their respective institutions.
The policy-based loan will be provided as budgetary support to Nepal. According to the agreement, the loan will have a repayment period of 24 years, including an eight-year grace period. The interest rate will be one percent until February 1, 2034, after which it will increase to 1.5 percent.
Speaking on the occasion, Finance Secretary Dr Upadhyay said that strengthening public financial management and improving service delivery are directly linked to the effective implementation of federalism. He noted that establishing a robust fiscal management system is one of the government’s key priorities.
The programme focuses on improving budget formulation, implementation, and results-based management across all three levels of government. According to the Finance Secretary, these reforms are expected to enhance the overall budgetary process and make public service delivery more effective.
The programme is also expected to improve the public procurement system, promote fiscal discipline and revenue mobilization, strengthen institutional capacity, and further empower local governments, thereby advancing inclusive and results-oriented development.
ADB Country Director Cauchois said the concessional loan aims to improve fiscal governance in Nepal. He added that the programme will strengthen fiscal sustainability and fiscal federalism by expanding fiscal space through expenditure rationalization, increased revenue generation, reduced fiscal risks, innovative financing, and improved management and governance of public enterprises.
The agreement signing ceremony was attended by officials and staff of the Ministry of Finance as well as representatives of the Asian Development Bank.
Comment