Kathmandu: The Asian Development Bank (ADB) is set to provide Nepal with USD 100 million in concessional loan aid to support the implementation of fiscal federalism, strengthen public financial management, and improve budgetary systems across all three tiers of government. The loan will be provided under Subprogram-2 of ADB’s Strengthening Public Financial Management and Devolved Service Delivery Programme.
According to National News Agency Nepal, Finance Secretary Dr. Ghanashyam Upadhyay and ADB Country Director for Nepal, Arnaud Cauchois, signed an agreement on behalf of their respective institutions during a programme held at the Ministry of Finance on Wednesday. The policy-based loan is intended as budgetary support to Nepal, with a repayment period of 24 years, including a grace period of eight years. The interest rate will be one percent until February 1, 2034, after which it will increase to 1.5 percent.
Finance Secretary Dr. Upadhyay emphasized that strengthening public financial management and improving service delivery are directly linked to federalism. He highlighted the establishment of a robust fiscal management system as one of the government’s major objectives. The programme focuses on improving budget formulation, implementation, and results-based management across all levels of government, which is expected to enhance the overall budgetary process and make public service delivery more effective.
The implementation of the programme is also expected to improve the public procurement system, promote fiscal discipline and revenue generation, strengthen institutional capacity, and further empower local governments. This approach aims to advance inclusive and results-oriented development.
ADB Country Director for Nepal Cauchois stated that the concessional loan is aimed at improving fiscal governance. He explained that the programme will strengthen fiscal sustainability and fiscal federalism by expanding fiscal space through expenditure rationalization, increased revenue generation, reduced fiscal risks, innovative financing, and improved management and governance of public enterprises.
The agreement signing ceremony was attended by employees and officials of the Ministry of Finance as well as officials from the Asian Development Bank.