Nepal asks for more foreign aid

Dr Mahat said the country faced an economic crisis

The new government of Nepal has appealed for more foreign aid to meet what it says is a shortfall of more than $170m in its annual budget.

Finance Minister Dr Ram Sharan Mahat urged Nepal's donors to revive projects either terminated or downsized during the rule of King Gyanendra.

Nepal, one of the world's poorest countries, receives two-thirds of its development budget from foreign donors.

King Gyanendra's rule ended last month when he reinstated parliament.

Economic fears

Dr Mahat sought support from the donor community for the rehabilitation of conflict victims and their reintegration in society.

Addressing donors at a meeting in the Nepalese capital, Kathmandu, on Wednesday, Dr Mahat said the country was on the verge of facing serious economic crisis.

He said the revenue shortfall in the current fiscal year could amount to as much as eight billion rupees ($177m).

He said that security budgets had been raised over the last four years and now exceeded over 3% of the gross domestic product.

The minister warned democracy and peace in Nepal could be at risk again if Nepalis did not see improvements.

Dr Mahat urged the US and the European Union to provide duty free access for readymade apparels manufactured in Nepal.

Earlier, a senior finance ministry official said Nepal might need over $1bn to launch reconstruction, rehabilitation and relief works in near future.

Representatives of the donor community assured the new government of their continued support but asked the government to detail its priorities first.