Kathmandu– The Asian Development Bank (ADB) is set to provide Nepal with USD 100 million in concessional loan support to help implement fiscal federalism, strengthen public financial management, and improve budgetary systems across all three tiers of government.
The assistance will be extended under Subprogram–2 of ADB’s Strengthening Public Financial Management and Devolved Service Delivery Programme. The agreement was signed on Wednesday at the Ministry of Finance by Finance Secretary Dr Ghanashyam Upadhyay and ADB Country Director for Nepal Arnaud Cauchois.
Photo: Gopal Dahal / RSS
The policy-based loan will be provided as budgetary support with a repayment period of 24 years, including an eight-year grace period. The interest rate has been fixed at one percent until February 1, 2034, after which it will rise to 1.5 percent.
Speaking at the signing ceremony, Finance Secretary Dr Upadhyay said effective public financial management and improved service delivery are integral to the successful implementation of federalism. He added that establishing a strong fiscal management system remains a key priority of the government.
According to the Ministry of Finance, the programme focuses on strengthening budget formulation, implementation and results-based management at the federal, provincial and local levels. It is also expected to enhance public procurement, promote fiscal discipline and revenue mobilisation, build institutional capacity and further empower local governments.
ADB Country Director Cauchois said the concessional loan is aimed at improving fiscal governance and sustainability. He noted that the programme will support fiscal federalism by expanding fiscal space through expenditure rationalisation, increased revenue generation, reduced fiscal risks, innovative financing and improved management and governance of public enterprises.
Officials from the Ministry of Finance and the Asian Development Bank were present at the agreement signing ceremony.
