India Agrees to Channel Reconstruction Fund to Other Projects

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India Agrees to Channel Reconstruction Fund to Other Projects
Nepal's administrative building Singha Durbal in scaffolds for reconstruction in this file photo. Photos: NBA

December 6: India has agreed in principle to allow Nepal use the concessional grant provided under its Line of Credit for reconstruction of earthquake ravaged structures in other infrastructural development projects.

India had pledged a total of US$ 1 billion to help rebuild Nepal after the devastating earthquakes of 2015. Out of the total amount, Rs US$ 750 million was set aside as concessional loan and US$ 250 million as grant.

India’s then foreign minister late Sushma Swaraj had pledged the amount during an international conference organized by Nepal to seek international support and funds for reconstruction on June 26, 2015.

The government decided to request India to channel the fund to other projects after the National Reconstruction Authority said it was facing difficulties to utilize the funds by adhering to all the pre-conditions set by the southern neighbor.

Nepal had made the request during a review meeting with India held last year.  A source at the Ministry of Finance told New Business Age that India agreed to the request of Nepal during a recent meeting of officials representing the two countries to discuss the issue of concessional loan in Kathmandu.

The National Reconstruction Authority confirmed that India’s Exim Bank has agreed to the demand of Nepal. The bank reportedly sent a letter to the NRA stating that it was ready to amend the agreement reached in 2016 to incorporate the new demand of Nepal in channeling the reconstruction amount elsewhere.

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