Kathmandu, Oct. 25: For the first time in its history, the Fund for Responding to Loss and Damage (FRLD) has decided to provide US$20 million (around Rs. 3 billion) in grant assistance to Nepal to support rehabilitation and reconstruction following the devastating floods of August 26, 2026, which claimed 1,500 lives, left more than 5,000 people missing and affected over 60,000 others.
At its special meeting on October 22, the FRLD board decided to provide Nepal the grant assistance under the Barbados Implementation Modality (BIM) framework.
The decision followed a formal request for assistance submitted to the FRLD on August 31, 2026, by Minister of Agriculture, Forests and Environment Gita Chaudhary and Finance Minister Dr Swarnim Wagle. The request came after devastating floods affected 15,000 households, primarily in three districts — Rasuwa, Nuwakot and Dhading.
To access the grant assistance, Nepal will have to submit a project proposal and implement urgent climate actions on the ground.
The FRLD was established in 2023 to help countries deal with climate-related losses and damage. The decision is historic because the FRLD has not previously decided to allocate money to any country, making Nepal the first to receive such an allocation, said Manjeet Dhakal, Lead Advisor to the Chair of the Least Developed Countries (LDC) Group on Climate Change.
“The Fund is intended to support the reconstruction and rehabilitation of areas affected by the Bhotekoshi flood. However, the money has only been allocated at this stage. Nepal must complete the necessary procedures and submit a proposal to access the funds,” Dhakal said.
Dr. Maheshwar Dhakal, spokesperson and chief of the Climate Change Management Division under the Ministry of Forests and Environment, said Nepal had requested assistance from the FRLD to address climate-related losses and damage caused by the devastating Bhotekoshi disaster. The Fund responded by giving the request a high priority and holding a special board meeting to discuss Nepal’s situation.
“Bringing representatives together to discuss Nepal’s request at a special meeting demonstrates the importance the Fund has attached to our situation. We should recognise and appreciate this response. At the same time, we must acknowledge that this allocation alone will not be enough. Nepal needs to mobilise additional resources, improve its budgetary systems and undertake the necessary work through its own institutions,” Dr. Maheshwar said.
Further steps to access the funds
“The FRLD will provide us with guidelines on the documents we need to submit and the procedures we must follow. Based on those guidelines, we will prepare and submit a proposal. Once we complete the required process and submit the proposal, it will be presented at the FRLD’s next board meeting for endorsement. After the board approves it, the project can move towards implementation,” Dr. Maheshwar said.
The proposal will reflect the government’s priorities, policies and laws, as well as the findings of the Rapid Disaster Needs Assessment (RDNA). The National Planning Commission will identify priorities based on the losses and damage suffered and the measures needed for recovery. The proposal will then be prepared accordingly.
According to Dr. Maheshwar Dhakal, the FRLD’s next board meeting is scheduled for December. Following its recent online board meeting, Nepal expects to receive guidance on the required documents, procedures and timeline before finalising its approach.
Dhakal said Nepal would need to explain how the money would be used in its proposal. As this is the Fund’s first such allocation decision, there is no precedent to indicate how long the process might take. However, the FRLD was established to respond to situations like this and provide financial support to countries facing severe losses and damage. Nepal therefore hopes the process will be relatively straightforward, he said.
The government can submit the proposal directly or work through institutions accredited to other climate funds. These include the National Trust for Nature Conservation (NTNC) and other eligible national institutions. International organisations, including United Nations agencies, may also help facilitate the process.
Nepal has evidence of the role of climate change in the disaster. The World Weather Attribution report provides information on the unusually high temperatures in the affected region. Similarly, the National Disaster Risk Reduction and Management Authority (NDRRMA)'s rapid disaster needs assessment provides details of the extent of the damage and losses, Dhakal said.
Nepal will submit its proposal within the timeframe specified by the Fund, Dr. Maheshwar said. “If the Fund asks us to submit the proposal within a week, we will do so within a week. If it gives us two weeks or a month, we will work within that timeframe. We are waiting for its guidance.”
Concerns over adequacy of funds
Dr. Maheshwar said the amount allocated by the FRLD would not cover the entire cost of recovery from the Bhotekoshi disaster. “I have never assumed that the entire cost of recovery would come from a single fund, institution or country,” he said.
Nepal must identify and access different sources of finance. Government employees have contributed more than 10 days’ salary to support the affected people. Other sources include the Prime Minister’s Disaster Relief Fund, the national budget and resources available through the three tiers of government. The private sector and international community are also potential sources of support.
Nepal still needs to discuss grants, loans and other forms of assistance with international partners. It would be unrealistic to expect a single funding allocation to cover the entire cost of recovery.
Dhakal said Nepal should also explore other sources of climate finance, including the Adaptation Fund and the Green Climate Fund.
“We need to mobilise resources from different sources and use them in the country’s best interests. There are several climate funds that Nepal can approach. The Adaptation Fund has also indicated that it will discuss related issues, and Nepal can submit proposals to the Green Climate Fund as well,” he said.
How the money will be channelled
The money is likely to be channelled through an agency, as the Fund has its own procedures and requirements. Nepal is waiting for guidance on whether it must work through an already accredited institution or whether other arrangements will be permitted, Dr. Maheshwar said.
“One possible option is to channel the money through the government’s systems. We are open to receiving the funds through the government’s treasury system if the FRLD permits this arrangement. However, we have not yet assumed that the money will be transferred directly to the national treasury,” he said.
According to Dhakal, the money is not intended for immediate relief, as that phase has already passed. The focus should now be on reconstruction and rehabilitation, including restoring the lives and livelihoods of affected communities. The assistance should be viewed from a broader perspective than climate change adaptation alone.
Nepal’s recovery efforts will also depend on contributions through the Prime Minister’s Disaster Relief Fund, public fundraising, development partners and other organisations, as well as government allocations through the national budget.
According to Dhakal, the decision could also provide a pathway for other countries facing similar disasters in the future. Although Nepal is the first country to receive such an allocation from the FRLD, the experience may help demonstrate how financial support can be mobilised for countries facing climate-related loss and damage.
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