Kathmandu, August 3 :

Finance minister Dr Ram Sharan Mahat, while speaking at the gathering of senior economists, experts and lawmakers at the ministry of finance, reiterated his commitment that he would not rush to enter into Highly Indebted Poor Countries (HIPC) Initiative and Multilateral Debt Relief Initiative (MDRI) as Nepal can better its economy by expediting reform activities.

Mahat said that Nepal has been a good borrower and paying back its loans to donors on a regular basis and it does not seem to be in a debt crisis. He urged all concerned stakeholders to form a consensus on reform initiatives to expedite it further and to save Nepal’s credibility internationally.

HIPC was launched by the World Bank (IMF) and International Monetary Fund (IMF) as a comprehensive approach to debt reduction in highly indebted poor countries and MDRI was launched in 2006 as an important supplemental initiative for debt relief and progress towards the millennium development goals based on a G8 initiative in 2005.

As this initiative was launched by World Bank and IMF in other countries in response to debt crisis that affected poor economies, Nepal still does not seem to qualify to this category, according to its growth rate of GDP and revenue mobilisation in view of thresholds fixed for HIPC. Currently Nepal has over Rs 234 billion outstanding foreign debt while domestic debt comes to Rs 84 billion as on July 16, according to statistics.

In today’s debate organised by the ministry of finance (MoF) on whether Nepal sho-uld join HIPC or not, most experts did not favour entering HIPC saying that a changed political situation has opened tremendous opportunities in terms of economic revival. It has rejuvenated forei-gn aid flow for reconstruction activities.

Presenting a paper on HIPC and MDRI, senior economic advisor at MoF, said that for a total of 40 countries, most of them in sub-Saharan Africa, are now determined eligible to receive debt relief under the HIPC initiative.

He said that 29 countries which are in the initiative already will get $59 billion in lower debt service payments over time.

Despite Laos, Sri Lanka, Myanmar and Bhutan having been on the list of potentially eligible countries for the HIPC initiative, they later asked the Bretton Wood Institutions to remove their names from the list. Donors are also forcing currently Nepal to be on the list.

However, experts are not agreeing to enter HIPC.

Former chief secretary, Dr Bimal Koirala said at the same function that countries who have entered into HIPC initiative have registered disappointing economic growth. As Nepal holds tremendous potential to achieve a double digit growth in the changed context, entering into HIPC would be a deterring factor, said Koirala. After entering the HIPC, forei-gn aid flows is likely to be stop-ped in Nepal’s potentially competitive areas such as hydro-power and electricity, he felt.

Prof Bishwambher Pyak-uryal, president of Nepal Economic Association (NEA) suggested the government to do serious homework before talking about HIPC. The issue of debt sustainability needs to be taken care of, he suggested.

Dr Tilak Rawal, former governor of Nepal Rastra Bank said that hydropower and tourism are real cash crops of Nepal.