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Mr. Hiroshi JINGU, Charge d'Affaires a.i. of Japan to the Kingdom of Nepal, and Mr. Bhanu Prasad Acharya, Secretary of the Ministry of Finance of His Majesty's Government of Nepal, have signed and exchanged a set of Notes today on behalf of their respective governments.

Under the Notes, the Government of Japan will extend an estimated total grant of twenty-one billion one hundred sixteen million one hundred fifty-nine thousand two hundred and ninety-six Japanese yen (21,116,159,296), equivalent to one hundred ninety-three million one hundred and two thousand US dollars (US$193,102,000), or about fourteen billion three hundred thirty-seven million eight hundred and seventy-two thousand Nepalese rupees (NRs.14,337,872,000), to His Majesty's Government of Nepal for Debt Relief Measure in the form of the cancellation of out-standing debts (principal and interest) that fallen or falling due on or after April 1, 2003, which is payable under the loan agreement concluded in accordance with the Exchange of Notes concluded between both Governments for loan assistance up to Japan's Fiscal Year (JFY) 1987.

Up to the end of JFY 1987, the Government of Japan has extended loan assistance to His Majesty's Government of Nepal for the execution of the following projects. i) The Kulekhani No. 1 Hydropower Station Project, ii) The Kulekhani No. 2 Hydropower Station Project and iii) The Udayapur Cement Plant Project.

With this effect, in JFY 2004, the Government of Japan will extend a total grant of three billion seven hundred six million six hundred seventy-two thousand four hundred and eighty-nine Japanese yen (¥3,706,672,489), equivalent to thirty-three million eight hundred and ninety-seven thousand US dollars (US$33,897,000), or about two billion five hundred sixteen million eight hundred and thirty thousand Nepalese rupees (NRs.2,516,830,000), to His Majesty's Government of Nepal for Debt Relief Measure in the form of the cancellation of out-standing debts (principal and interest) that are payable to the Government of Japan. A similar cancellation of out-standing debts will be made from the coming JFY 2005 onwards through the exchange of Note Verbales between the two governments based on the Exchange of Notes signed today.

Previously, in order to relieve heavily indebted nations of their outstanding debts and in line with the commitment made by the Government of Japan at the meeting of the Trade and Development Board of the UNCTAD in 1978 and the Cologne Summit 1999, the Government of Japan has been extending Grant Assistance for Debt Relief to His Majesty's Government of Nepal. This is equivalent to the repayment of all debts that are concluded under the Exchange of Notes signed until the JFY 1987, for poverty reduction and socio-economic development expecting the effective and efficient utilization of resources made available by the debt relief.

As of JFY 2002, the Government of Japan has extended a total of nineteen billion five hundred twenty-eight million six hundred and seventy-eight thousand Japanese yen (¥19,528,678,000) as Grant Aid for Debt Relief to the Kingdom of Nepal.

Mr. JINGU reiterated that, instead of providing Grant Aid for Debt Relief, Japan will forgive the debts by canceling the relevant ODA debts owed to the Japan Bank for International Cooperation (JBIC) from April 1, 2003 in order to achieve an earlier solution to the debt problems of developing countries as well as to reduce the burden on the indebted countries and to enhance the transparency and efficiency of Japan's ODA.

Mr. JINGU further said, under this new arrangement, the Exchange of Notes has been signed and exchanged today to help reduce the debt burden of His Majesty's Government of Nepal by canceling the out-standing debts that were payable to the Government of Japan in the coming years.

In this context, Mr. JINGU expressed his sincere hope that the new arrangement regarding debt relief will certainly help His Majesty's Government of Nepal for effective and timely mobilization of the precious resources needed for the development of the Kingdom of Nepal. Mr. JINGU also expressed his expectation that, with this new arrangement, His Majesty's Government of Nepal will be able to take necessary measures required to reduce poverty and promote the social and economic development of the Kingdom of Nepal in order to achieve the goals set-out in the PRSP.

Furthermore, Mr. JINGU also noted that this JFY 2004 is the 50th anniversary of Japan's involvement in international development through its ODA by placing its first hand on Colombo Plan Scheme. In this context, Mr. JINGU expressed his belief that cooperation between the two nations would be further strengthened in the days to come.

Mr. JINGU also expressed his belief that the continued support of the Government of Japan to His Majesty's Government of Nepal in its development efforts would certainly play a significant role in the strengthening of the existing cordial relationship between the government as well as the people of the two nations.