Manila, Nov 1 (IANS): The Asian Development Bank (ADB) said on Friday that it has approved a loan of $85 million to fund the modernisation of irrigation networks and increase agricultural production in Nepal.

The ADB said the Irrigation Modernisation Enhancement Project will develop a more efficient and climate-resilient agriculture and irrigation system for about 56,000 farm households across five provinces in Nepal, Xinhua news agency reported.

Nepal's agriculture sector contributes 26 per cent to the gross domestic product. However, growth has stagnated at 2.7 per cent annually due to unreliable irrigation, while climate-related hazards such as floods, droughts, and heat waves have intensified food insecurity and reduced resilience.

The project promises to upgrade more than 31,000 hectares of agricultural command areas covering 100 farmer-managed irrigation systems.

The total project cost is $133.64 million. This includes $16.14 million from the government and 2.5 million dollars from farmer-beneficiaries.

The government is in the final stages of securing a loan from a development partner to bridge the remaining 30 million dollars funding gap through co-financing.