Thursday, January 15, 2009

Foreign aid dependency increases sans effectiveness

Assuming that the population of Nepal is 25 million, each Nepali individual has a foreign debt of Rs 8,500 as the total foreign debt stood at Rs 2.16 trillion, according to data till July 16, 2007.
Though Nepal started taking foreign aid since 1950, its effectivessness has always been under scanner due to its untransparent and unaccountable conditions, said the experts at a programme Foreign Aid and its effectiveness in Nepal organised by ActionAid Nepal in association with South Asia Watch on Trade, Economics and Environment (SAWTEE) and Society of Economic Journalists (Sejon) today. "Despite complaints of foreign aid effectiveness and utilisation, Nepal needs foreign aid as it needs more resources with increasing economic activities," Krishna Gyawali, co-ordinator of Foreign Aid Division under Finance Ministry, said. "Is the aid making us dependent on them or not could be another debate," he added. "But psychological dependence is more alarming."
"The same question has been repeatedly raised because of lack of standards and long-term vision on foreign aid that contributes a substantial portion of development expenditure, averaging about 55 per cent per year," he said adding that the government has been, thus, reviewing the Foreign Aid Policy that was formulated long ago. "Before the Nepal Development Forum meet -- scheduled for March end -- we might have a reviewed Foreign Aid Policy with clear long-term vision and standard priority set-up," Gyawali informed.
"In the absence of such criterion, there has been confusion in priority setting," he said, adding that aid fatigue is also not good. Apart from the new policy and donor mapping, aid monitoring and evaluation is also key. "Aid should be for development financing not for the development itself," Gyawali said.
Agreed Dr Posh Raj Pandey, chairman of SAWTEE. "Foreign aid is needed to enhance development capacity," he said adding that countries need foreign aid to bridge gap between savings and investment and foreign currency. "But in macro-level, there is no resource gap due to inward flow of remittance and foreign currency situation is also comfortable," Pandey said.
Conditionalities are much-talked issue related to foreign aid. But Dr Pandey opined that conditions are helpful in curtailing unproductive expenses. "Periodic evaluation might put pressure on donors and they would be more accountable, he opined.
Dr Dhurbesh Chandra Regmi, programme director of SAWTEE welcomed the participants in the programme where Paras Kharel and Kapil Gautam presented the findings of perception survey that was launched during the programme.

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