Kathmandu: Nepal's government will run out of spending money in two weeks time if a political row that has blocked a new budget drags on, the finance minister said yesterday, making it unable to service its loans or pay salaries.
The Himalayan republic, South Asia's poorest economy, has been without an effective government since Prime Minister Madhav Kumar Nepal resigned in June, bowing to pressure from Maoists former rebels who want to head a new coalition government.
But lawmakers have failed to elect a new leader because no party commands the majority in parliament needed to rule, and the haggling for power has delayed the annual budget which was meant to be passed in mid-July, the start of the financial year.
The government has been spending from an interim budget allowed under the interim constitution, but money from that runs out on November 16, Finance Minister Surendra Pandey said.
"This will be very serious and our credibility will be lost," he said. "We will have no money left even to pay for the food for the inmates of jails, old-age pension and run day-to-day administration beyond that day."
Officials said Nepal had no commercial debt. Outstanding foreign loans from international donors including the World Bank, the Asian Development Bank as well as some countries such as Japan totalled about $3.5 billion as of mid-March.
