Nepal on Wednesday said it will mobilise internal resources to fund military operations against rebels and carry out development works.

The decision was taken a day after India and Britain cut off military assistance to the Himalayan kingdom.

"We will have to increase our tax net and mobilise other resources for the military operation if donor countries stop military and financial assistance," Finance Minister Madhukar Shumsher Rana told media persons on Wednesday.

Rana, however, hoped that donor countries will not alter their assistance policy. He drew parallels to the political situation in Sri Lanka [Images], where foreign investments continued to pour in. "We should learn from the civil war in Sri Lanka," added Rana.

The finance minister acknowledged that the revenue has declined due to the economic blockade imposed by the Maoists for the last two weeks. He asserted that the blockade was an attempt to ruin the country's economy.

Rana added that the government will punish tax evaders and bring to justice corrupt bureaucrats and politicians.

He claimed that no international mediation was required to solve the Maoists problem. "We will solve it internally," said Rana. However, he said the government welcomes an international broker in the facilitation of the peace process.

Earlier reports:
India, Britain suspend military aid to Nepal
Blockade complete in Western Nepal
Nepal: Help, not sermons