Himalayan News Service

Kathmandu, March 10:

Nepal could lose the third slice of a funding by the International Monetary Fund (IMF), partly due to announcement of a roll back in some of the fuel prices. The World Bank has already announced it would not disburse the second instalment of a proposed $70 million budget support during the current fiscal year that ends on July 15. One of the first things after February 1 was to rollback some of the fuel prices announced by the previous government of Prime Minister Sher Bahadur Deuba in a bid to win quick public support. The action has not found favour with the IMF.

In November 2003, the IMF had approved of a $72 million Poverty Reduction and Growth Facility (PRGF) arrangement for Nepal to be disbursed in three years, roughly after every six months, subject to the government implementing the reforms and policies agreed upon. Two instalments of about $10.6 million had been paid so far and the third disbursement would have come up around April this year. The Deuba government, prior to its ouster, had hiked fuel prices following WB and IMF pressure to maintain parity with oil prices in the world market and especially with bordering country India. The government’s earlier policy of subsiding fuel was bleeding the state exchequer and costing the state-owned Nepal Oil Corporation (NOC) losses worth billions. It also resulted in fuel being rampantly smuggled out to the bordering Indian towns and being sold there at higher prices.