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Kathmandu Tuesday October 23, 2001 Kartik 07, 2058.
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Loan pact
The government signed a multi- billion rupee deal with the
Asian Development Bank (ADB) known as the Poverty Reduction Partnership Agreement (PRPA)
the other day. The agreement aims to lessen the existing rate of poverty by ten percent in
a period of fifteen years. Such a bilateral accord on poverty alleviation was not
unexpected since the government had been eagerly looking for a long time for more
financial assistance for its poverty reduction programme. Besides, Nepali political
leaders have rarely shown any hesitation in borrowing from any international financial
institution. This is the main reason the country has to allocate 15 percent of its annual
budget just to pay interest of its external debt. Another 15 percent goes for repayment of
principal. Borrowings so far from international financial institutions have been meant to
cover the range of development activity from extension of electricity and telephones, road
construction and blacktopping to poverty eradication in general. There is not a single
sector for which the government has mobilized development funding from internal resources.
The country remains entirely dependent on foreign loans for its developmental hopes.
The ADB is going to provide about 306 million US dollars for
the PRPA within the next three years in addition to four million dollars for technical
assistance. This, as claimed by the Finance Minister, would give due importance to
sustainable poverty reduction. But while the Finance Minister has praised the agreement as
an understanding between the government and the ADB he has not been forthcoming about the
specific areas the government would focus on while dealing with poverty. If the way the
government has set about achieving the target of poverty reduction is anything to go by,
only a handful of people, those who are in power, will benefit from PRPA. The fact is the
government has yet to outlined specific and effective strategy to fight poverty. As a
result, the rate of poverty, which stood at 40 percent a decade ago, has increased to over
52 percent. Rural folks continue under abject poverty for the lack of education, health
and employment.
After decades of development effort Nepal has yet to make
sufficient strides in putting in place the basics needed for poverty alleviation. It has
not generated substantial employment, and neither has it provided formal education to all
children nor ensured good governance. Half the population has no access to primary health
care. The development of human resources should have been taken as the key to poverty
reduction. Unfortunately, that has never been realized even after a decade of the poverty
reduction programme. Meanwhile, "casteism" that has emerged after the
restoration of democracy has become a new challenge to development. The politicians have
often misdirected state funds at cost to the country. In the absence of internal resources
mobilisation, the country has been reeling under external debt. If the government does not
effectively utilize this new loan or fails to achieve the target of poverty reduction,
this country might only sink deeper into the debt trap. The government must now be more
focused in its measures against poverty, and the focus should be on the rural poor. It
must also mobilize internal resources and must observe the laws more effectively.
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