Denmark announces aid worth two billion rupees

Kathmandu, May 17:

Donor community at an exclusive meet called by the finance minister Dr Ram Sharan Mahat today disclosed that it is ready to support Nepal financially to rescue its flagging economy and ensure peace.

However, donors continue to be unsure about what will happen regarding the negotiations with the Maoists and to the prospects of sustained peace.

Security expenditure over the past four years, Dr Mahat pointed out to the donors, has exceeded 3.4 per cent of the total GDP. It is very high for a country like Ne-pal where annual revenues make up only about 13 per cent of GDP. He said that in the current fiscal year, there will be an additional deficit of about Rs 5.1 billion.

Most donor representatives expressed underlined the need to include the development agenda in the talks with the Maoists. This is required to ensure both development and a lasting peace, they felt.

Donor representatives also emphasised the need for security at the local level to keep development projects going.

Ken Ohashi, country director of the World Bank expressed serious concerns regarding the imminent expiry of Poverty Reduction Growth Facility (PRGF). He also asked for detailed programmes and policies from the government, formed on the basis of a consensus. Ohashi, however, did not promise any non-budgetary support.

Following the views expressed by the donors, Dr Mahat ensured the community of PRGF’s continuation.

Sukhwinder Singh, chief of the Nepal-based International Monetary Fund (IMF), expressed the views that the international donor community would support Nepal in this critical juncture. He informed that the PRGF is expiring in about four months which might have serious implications on the reform process.

PRGF is supported by the WB and IMF.

Mark Mallalieu, representative of DFID on behalf of UK, Denmark, Norway, Switzerland, Canada, Netherlands, Finland and German Development Agency GTZ said that Nepal’s central challenge is delivering a lasting peace. Donors must not place demands on the government that deflects it from its objective, he added.

He emphasised the need to ‘widen the development space’. If we could deliver now, people’s confidence in peace process will increase.

Ambassador of Denmark Finn Thilsted announced that the Danish government would restart the rural energy programme amounting to Rs 1.5 billion which was suspended earlier. Thilsted also said that Denmark was ready to provide Rs 500 million more to Nepal for peace process and demobilisation of army and the Maoists.

Jamesh F Moriarty, US ambassador to Nepal, said that successful peace talks are needed. He said US was keen to see a successful transition of democracy in Nepal.

Japan also asked for prioritisation of projects and programmes.

Matthew Kahane, resident chief of UNDP Kathmandu, said that the UN is ready to support the government during the conflict and political instability. He hoped that negotiations between the governments and the Maoists would be effectively concluded.