S
samsonyuen
Guest
From: hosted.ap.org/dynamic/sto...TE=DEFAULT
_____________________
May 13, 11:53 PM EDT
Out of Cash, Nepal Asks for Global Aid
By NEELESH MISRA
Associated Press Writer
KATMANDU, Nepal (AP) -- Nepal is in a deep financial crisis with the government running out of cash and revenue growth below zero, the finance minister said as he appealed for urgent international help.
Finance Minister Dr. Ram Saran Mahat said he would take urgent administrative measures to ease the financial burden until the budget is delivered in two months, when he would likely freeze defense spending that has spiraled due to the decade-long communist insurgency.
"My immediate problem is to address the serious liquidity crunch, how to tide over the financial crisis," Mahat told The Associated Press late Saturday. "Huge liabilities have been created that we have to meet, on the security front, developmental activities ... the revenue situation is a growth of minus 3 percent, there is a prohibitive expenditure gap."
A liquidity crunch is a state of having too little cash and too few current assets to be able to pay for liabilities. The lack of enough liquidity can force a government to make an emergency borrowing at a high interest rate.
       
"We appeal to the international community to increase support to Nepal to tide over the present crisis," Mahat said.
More than one-third of Nepal's 27 million citizens live below the absolute poverty line, earning less than a dollar a day.
Two-thirds of the development budget in Nepal, one of the world's poorest countries, comes from foreign donors. In the months following King Gyanendra's takeover of direct rule in February last year, several donor nations withdrew aid to demand a return to democracy.
The king gave up power last month and installed a new government after nationwide rioting and anti-monarchy protests. Several nations have resumed aid.
       
Latest Business News
Bank of China Ready to Launch $9.9B IPO
Arroyo Opens Philippines' Biggest Mall
Thousands of Doctors Strike in New Delphi
China Builds Dam for Hydroelectric Project
Tesco to Sell Halal Food in London Stores
Latest Economic News
Dow Closes Up 16, Nasdaq Finishes Up 14
Friday's Wall Street Glance
German Parliament Approves Hefty Tax Hike
French Economy Grows 0.5 Percent in 1Q
Japanese Economy Grows 1.9 Percent
Economic Indicators Index Falls in April
Stocks Up in Respite From Week of Selling
Chile Lowers 2006 Economic Growth Forecast
More Rate Hikes Could Force Stocks Down
Out of Cash, Nepal Asks for Global Aid
Buy AP Photo Reprints
PHOTO GALLERY
Nepal Protests
But Mahat said: "We need additional funding, not just commitments for the ongoing programs."
The defense budget of more than US$200 million has cut into government resources, especially as the army's strength grew swiftly in a year from 78,000 to the current estimate of about 100,000. Nepal's total budget last year was US$1.8 billion.
The new government of Prime Minister Girija Prasad Koirala is hoping that the end of fighting under an ongoing cease-fire will allow some money to be diverted for development work. The government has promised to try to bring Maoist rebels into the political mainstream after a decade-long insurgency that has killed 13,000 people.
"The situation of hostility and offensive action and the start of the peace process will certainly help ... there will be no growth in the defense budget but reduction may be difficult because liabilities are huge," Mahat said.
"There is a huge standing army ... you cannot cut back the size of the army. But the defense budget could be frozen," he said.
_____________________
May 13, 11:53 PM EDT
Out of Cash, Nepal Asks for Global Aid
By NEELESH MISRA
Associated Press Writer
KATMANDU, Nepal (AP) -- Nepal is in a deep financial crisis with the government running out of cash and revenue growth below zero, the finance minister said as he appealed for urgent international help.
Finance Minister Dr. Ram Saran Mahat said he would take urgent administrative measures to ease the financial burden until the budget is delivered in two months, when he would likely freeze defense spending that has spiraled due to the decade-long communist insurgency.
"My immediate problem is to address the serious liquidity crunch, how to tide over the financial crisis," Mahat told The Associated Press late Saturday. "Huge liabilities have been created that we have to meet, on the security front, developmental activities ... the revenue situation is a growth of minus 3 percent, there is a prohibitive expenditure gap."
A liquidity crunch is a state of having too little cash and too few current assets to be able to pay for liabilities. The lack of enough liquidity can force a government to make an emergency borrowing at a high interest rate.
       
"We appeal to the international community to increase support to Nepal to tide over the present crisis," Mahat said.
More than one-third of Nepal's 27 million citizens live below the absolute poverty line, earning less than a dollar a day.
Two-thirds of the development budget in Nepal, one of the world's poorest countries, comes from foreign donors. In the months following King Gyanendra's takeover of direct rule in February last year, several donor nations withdrew aid to demand a return to democracy.
The king gave up power last month and installed a new government after nationwide rioting and anti-monarchy protests. Several nations have resumed aid.
       
Latest Business News
Bank of China Ready to Launch $9.9B IPO
Arroyo Opens Philippines' Biggest Mall
Thousands of Doctors Strike in New Delphi
China Builds Dam for Hydroelectric Project
Tesco to Sell Halal Food in London Stores
Latest Economic News
Dow Closes Up 16, Nasdaq Finishes Up 14
Friday's Wall Street Glance
German Parliament Approves Hefty Tax Hike
French Economy Grows 0.5 Percent in 1Q
Japanese Economy Grows 1.9 Percent
Economic Indicators Index Falls in April
Stocks Up in Respite From Week of Selling
Chile Lowers 2006 Economic Growth Forecast
More Rate Hikes Could Force Stocks Down
Out of Cash, Nepal Asks for Global Aid
Buy AP Photo Reprints
PHOTO GALLERY
Nepal Protests
But Mahat said: "We need additional funding, not just commitments for the ongoing programs."
The defense budget of more than US$200 million has cut into government resources, especially as the army's strength grew swiftly in a year from 78,000 to the current estimate of about 100,000. Nepal's total budget last year was US$1.8 billion.
The new government of Prime Minister Girija Prasad Koirala is hoping that the end of fighting under an ongoing cease-fire will allow some money to be diverted for development work. The government has promised to try to bring Maoist rebels into the political mainstream after a decade-long insurgency that has killed 13,000 people.
"The situation of hostility and offensive action and the start of the peace process will certainly help ... there will be no growth in the defense budget but reduction may be difficult because liabilities are huge," Mahat said.
"There is a huge standing army ... you cannot cut back the size of the army. But the defense budget could be frozen," he said.