World Bank promises loan of up to $500 million for quake-hit Nepal

The World Bank on Tuesday promised a loan of up to half a billion dollars to help Nepal rebuild after earthquakes killed nearly 9,000 people there in April and May, leveling homes and pushing hundreds of thousands of people deeper into poverty.

The global development lender, based in Washington, said it would lend $300 million for housing reconstruction and budgetary support, and a further $100 million to $200 million could be redirected from existing loans and be replaced at a later date.

The loan would be paid back over 38 years, and carries an interest rate of 1.56 percent, bank officials said.

Nepal said reconstruction from its worst disaster on record would cost some $6.6 billion over five years, and asked international donors to attend a conference this week to help.

Nepal's Finance Minister Ram Sharan Mahat said only some of that figure was expected to be paid for by donors, with the rest met through the government’s own resources, the private sector and individuals. He warned that Nepal should not become heavily indebted to foreign agencies during reconstruction.

"We will ask for grants and concessional loans payable over a long period of time," Mahat told Reuters.

Nepal owes about $3.8 billion, mainly to development banks, or 18 percent of GDP, and is due to pay back $200 million this year. It has almost no commercial foreign debt.

The Jubilee Debt Campaign, an activist group, has called for Nepal's debt to be canceled after the earthquake.

Aid, including loans from the World Bank and Asian Development Bank, already supports two-thirds of Nepal's economic development.

One in every four Nepalis lives on a daily income of less than $1.25, and the number of poor increased by 700,000 after the quake, according to government officials.

Last month, the United Nations complained that emergency funds for victims of the earthquake were slow in coming, as more than a dozen other long-running international crises, including in Syria and Iraq, had claimed donors' attention.

The World Bank normally focuses on the longer-term reconstruction that follows humanitarian disasters, but has been quick to jump in with emergency loans in recent years, promising at least $400 million last year to help West African countries contain the spread of the deadly Ebola virus.

(Reuters)