Dr. Mahat calls to halt costly bilateral loans
Dr. Mahat said the stringent conditions attached to bilateral loans—such as the mandatory use of donor-country contractors, goods, high interest rates, and short repayment periods—have failed to benefit Nepal.
KATHMANDU: Former Finance Minister and Nepali Congress lawmaker Dr. Prakash Sharan Mahat has strongly criticized Nepal’s increasing reliance on high-interest bilateral loans, calling them impractical and harmful to the country’s long-term interests.
Speaking at a program in Kathmandu, Dr. Mahat said the stringent conditions attached to bilateral loans—such as the mandatory use of donor-country contractors, goods, high interest rates, and short repayment periods—have failed to benefit Nepal.
“These bilateral loans often require us to use their contractors and materials, and the terms for repayment are extremely tight. None of this suits us. We must stop taking loans in this manner,” he emphasized.
Instead, he advocated for greater engagement with multilateral institutions like the World Bank and the Asian Development Bank. According to Dr. Mahat, such loans offer more inclusive project selection processes and ensure greater national ownership.
Clarifying his stance, Dr. Mahat said he is not opposed to increasing domestic borrowing if done wisely. He also criticized the current trend of distributing powers without securing financial resources and highlighted that despite Nepal’s vast forest cover, the country receives minimal climate financing.
He expressed concern over the distorted state of the national budget, stressing the need for a complete structural overhaul: “We must rebuild the budget system from zero,” he concluded.
