Public Debt Management Act, 2022

Explanation: For the purpose of this section, "Public entity" means a corporation, company, or institution established at the public level pursuant to prevailing law or established by the Government of Nepal, which is under full or majority ownership or control of the Government of Nepal.

(3) The Government of Nepal may provide a counter-guarantee for the internal debt taken by a provincial government or local level with the consent of the Government of Nepal, in accordance with prevailing federal law.

(4) Prior to providing a guarantee or counter-guarantee pursuant to sub-section (2) or (3), the Government of Nepal shall analyze the reason for taking the loan by such public entity or province or local level, the national interest involved in taking the loan, and whether the principal and interest of the loan can be repaid within the time specified in the agreement with the foreign government, foreign government bank or financial institution, or agency or organized institution providing the loan.

(5) A public entity that has taken a loan with the guarantee of the Government of Nepal pursuant to this section shall not, without the prior approval of the Government of Nepal, revalue its capital, reduce capital, or do or cause to be done any act that may result in the loss of capital.

(6) It shall be the duty of the public entity receiving such loan to comply with the directions given from time to time by the Government of Nepal on matters relating to the loan taken with the guarantee of the Government of Nepal pursuant to this section.

(7) If a public entity that has taken a loan with the guarantee of the Government of Nepal pursuant to this section is dissolved, or if the Government of Nepal considers that there is a possibility of dissolution, the Government of Nepal shall attach any property belonging to such entity in accordance with prevailing Nepal law and recover from such property an amount equal to the guarantee given and interest thereon.

(8) Notwithstanding anything contained in the prevailing Nepal law, until the principal and interest amount of the loan guaranteed by the Government of Nepal is recovered, no other person shall have a claim on the property of the borrowing public entity.

(9) If an organized institution taking a loan with the guarantee of the Government of Nepal fails to repay the principal and interest according to the agreement with the foreign government, foreign government bank or financial institution, or agency or public entity providing the loan, the amount of principal and interest that is not repaid shall be a liability upon the Federal Consolidated Fund or other government fund.

(10) For the purpose of making recommendations regarding the giving of a guarantee or counter-guarantee by the Government of Nepal pursuant to this section, there shall be a committee consisting of the member of the National Planning Commission looking after the concerned sector as coordinator, and the Secretaries of the Ministry of Finance, the Ministry of Law, Justice and Parliamentary Affairs, and the Ministry concerned with the project for which the guarantee is to be given as members.

(11) Other provisions relating to guarantees shall be as prescribed.