April 17: The government has decided to accept financial assistance of about Rs 98 billion (including loans and grants) from two separate donors. The government has decided to accept USD 659 million (about Rs 80 billion) from the United States Agency for International Development (USAID) and a concessional loan of USD 150 million (about Rs 18 billion) from the World Bank Group's International Development Association.

The Ministry of Finance informed that the government has already started its homework to receive the US grant. The grant will be received by Nepal within 5 years to be spent in various sectors. According to a Finance Ministry official, the government and USAID are preparing to sign the agreement after the cabinet decided to accept the grant.

According to the International Financial Assistance Coordination Division of the Ministry of Finance, the grant will be spent mainly on education, health, sustainable energy, agriculture and capacity building of the private sector. The projects are yet to be finalized even though the area for spending the grant that Nepal is about to receive has already been decided.

Ishwori Aryal, joint secretary at the Ministry of Finance, said that the grant agreement will be signed between the two sides after the government and the USAID decide on the projects. According to Aryal, work is underway to select relevant projects.

The grant amount will be received within five years at the rate of 132 million dollars (about Rs 16 billion) per year. If the agreement is signed this year, the grant will start coming from the next fiscal year and the full grant will come by 2027.

USAID spent 683 million dollars in Nepal from 2016 to 2021.

Although some analysts say that the current economic crisis will be alleviated if the government accepts such large loans and grants, finance ministry officials contradict the viewpoint.

According to the Ministry of Finance, this loan is agreed upon to support the programs in the budget. Its interest rate will be less than 1 percent per annum.

The loan, which is planned to be spent on sectors including institutional capacity improvement and implementation of federalism, will be credited to the country’s finance as soon as the agreement is signed. The government will make expenditures from the credited amount accordingly.

According to the officials of the ministry of finance, as only the decision to accept grants and loans is made, this amount will not come to the market immediately. They added that although its effects will be long lasting, it will not help to resolve the immediate crisis.