April 28, 2003
 Japan Extends Grant Assistance for Debt Relief
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His Excellency Mr. Zenji KAMINAGA, Ambassador of Japan to the Kingdom of Nepal, and Mr. Bhanu Prasad Acharya, Secretary of the Ministry of Finance, 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 is extending grant assistance of eighty million one hundred fifty-three thousand yen ( 80,153,000), equivalent to six hundred sixty-five thousand US dollars (US$665,000), or about fifty-one million three hundred seventy-eight thousand Nepalese rupees (NRs.51,378,000), to His Majesty's Government of Nepal as Grant Aid for Debt Relief in Japan's Fiscal Year 2002.
The Government of Japan has been extending Grant Aid for Debt Relief to the Kingdom of Nepal with the basic objective of assisting His Majesty's Government of Nepal in procuring commodities such as construction materials, fertilizer, petroleum products, medicines, transportation-related equipment and other materials which are essential for carrying out development activities in the Kingdom of Nepal.
In Japan's Fiscal Year 2002, previously, the Government of Japan had already extended one billion eight hundred eighty-nine million seven hundred thousand yen (1,889,700,000) to Nepal in four separate installments under Grant Aid for Debt Relief.
Since 1978, the Government of Japan has been extending such grant aid, Grant Aid for Debt Relief, to the Kingdom of Nepal. Since then, including the grant being extended today, the total grant being extended under debt relief to His Majesty's Government of Nepal for assistance in the ongoing development efforts, and to uplift people's lives, has risen to nineteen billion five hundred twenty-eight million six hundred seventy-eight thousand yen (19,528,678,000).
However, as of Japan's FY 2002 (by March 31, 2003), more than nineteen billion yen ODA debt (debt relief eligible loan) still remains as the balance for re-payment to be made to Japan Bank for International Cooperation (JBIC) by His Majesty's Government of Nepal. (JBIC is the lending agency of the Government of Japan.)
H.E. Mr. KAMINAGA has reiterated the recent decision made by the Government of Japan which was announced on December 10, 2002 regarding the change in present arrangement for debt relief which is to be effective from Japan's FY 2003 (April 2003 onwards).
Under this decision, until Japan's FY 2002 (by the end of March 2003), the Government of Japan will continue to extend Grant Aid for Debt Relief to His Majesty's Government of Nepal equivalent to the loan re-payment, which includes the principal and interest, made by His Majesty's Government of Nepal under the Exchange of Notes concluded between both governments for the loan assistance by Japan's FY 1987. Therefore, this will be the last Exchange of Notes for extending Grant Aid for Debt Relief under the earlier arrangement.
Under the Exchange of Notes concluded by Japan's FY 1987, the Government of Japan has extended the loan assistance to His Majesty's Government of Nepal for the execution of the project for Kulekhani No. 1 Hydro Power Station Project (Phase - I and Phase - II), Kulekhani No. 2 Hydro Power Station Project (Phase - I and Phase - II) and Udayapur Cement Plant Project.
With the change into the new arrangement, which is effective from April 1, 2003, the Government of Japan will waive the ODA debts, interest and principle, of the Kingdom of Nepal, which are currently eligible for Grant Aid for Debt Relief, by canceling the relevant ODA debts, instead of extending the Grant Aid for Debt Relief.
As a consequence of the decision, from April 1, 2003 onwards, the ODA debts, including interest and principle, will be canceled as each payment falls due under the repayment schedule. However, (it is expected that), His Majesty's Government of Nepal will make a new inter-governmental arrangement for depositing the future scheduled repayment, to be made by the relevant agency of His Majesty's Government of Nepal, in a special account in the Central Bank of Nepal, in Nepalese currency within a reasonable period. The fund so deposited in the account will be utilized for development activities of the Kingdom of Nepal with prior consultation with the Government of Japan. With this new arrangement, the deposited fund, which is expected to be precious resources for the Kingdom of Nepal, could be utilized for supporting its development endeavors.
Speaking on the occasion, H.E. Mr. KAMINAGA emphasized the necessity of effective and efficient utilization of available resources for the development of the Kingdom of Nepal. H.E. Mr. KAMINAGA 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 strengthening the existing cordial relationship between the two nations.
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