UN meet on LDCs
Nepal to be hit hard as debt cancellation refused

BY A STAFF REPORTER

Kathmandu, May 21 Nepal, a country grappling with heavy debt burden, is likely to be hit hard, as the recently concluded United Nations meet rejected Nepal’s proposal for debt cancellation of the Least Developed Countries (LDCs).

Experts said Nepal, an LDC, should go ahead with a long term vision to get out of the debt trap.

"Nepal is already using more than one fourth of her regular expenditure in debt-servicing, which is alarming," said noted economist Dr. Biswhombhar Pyakuryal.

He also warned of the possibility of steady rise in the debt that Nepal owes to foreign countries and donor agencies.

"It is because Nepal’s major aided-projects are going to mature by 2002 that will immediately require Nepal to settle the liability," he said. "Apart from this, expenditures for civil service reforms and security are going to rise in the days ahead which also require us to borrow more from foreign donors thereby increasing our indebtedness."

Other experts also agree ours is a foreign aid-dependent economy, as we are yet to make revenue collection and mobilisation more effective and efficient.

Earlier, Finance Minister Dr. Ram Sharan Mahat had tabled a proposal for the LDCs’ debt cancellation at the LDC-III, a week-long UN Conference on Least Developed Countries held in Brussels.

Dr. Mahat was also quoted as saying that his proposals for debt cancellation of LDCs did not receive the conference’s backing. "The possibility of full cancellation of debts is now remote," he had added.

"It was largely because there was no proper homework and lobbying on our part," commented Prof. Bishwombhar Pyakuryal while talking to this reporter Monday. "Had there been better preparation, the proposal may have been accepted in this meet itself," he added.

Forty-nine countries in the world have been identified as LDCs, and their total debt burden stands at 150 billion US dollars.

However, as a glimmer of hope for the LDCs, the conference adopted a 10-year plan aimed at breaking the cycle of poverty and despair of the world’s poorest countries and bringing them in to the economic mainstream, according to AFP reports.

Developed countries in the conference had come up with some kind of debt relief measures for LDCs. They also committed to further open their markets to the reduced or duty-free exports from LDCs.

Earlier in the week, the 15-nation EU had announced a programme of unlimited duty-free access to all LDC exports but arms and ammunition.

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