New Foreign Aid Policy will be instrumental in boosting development

The government has renamed Foreign Aid Policy to Development Cooperation Policy aiming at increasing its effectiveness of foreign assistance

During the Local Donor meeting here today to discuss the draft of Development Cooperation Policy 2013, the Finance Ministry also urged the development partners to extend their assistance through budgetary system as the Development Cooperation Report 2012 had revealed that almost a quarter of the foreign assistance is still out of budgetary system. “Some 23 per cent of the total aid has still been out of the budgetary channel hampering government’s efforts to maintain transparency in foreign assistance,” chief economic adviser of the Finance Ministry Chiranjibi Nepal said.

The donors have been supporting various non-governmental organisations (NGOs) except their Official Development Assistance (ODA).

“Channelising the foreign assistance through the budgetary system will help increase the transparency and accountability,” he said, adding that the transparency and accountability – the key buzz words of the development partners – will also help better outcome from the external assistance and lessen the dependency on foreign aid.

Presenting the highlights of the proposed Development Cooperation Policy, joint secretary at the minister and chief of the Foreign Aid Coordination Department Madhu Kumar Marasini said that the draft has focused on establishing a system to accept and mobilise foreign assistance in line with the government policy to reap maximum benefit in a transparent manner.

The proposed Policy envisages an environment to accelerate economic growth through effectively channelising foreign aid in line with the government policy, create an environment for private sector growth, trade enhancement and formulate a mechanism for effective implementation of donor funded programmes.

The proposed foreign aid policy will help graduate Nepal from the current status of Least Developed Country (LDC) to Developing Country status, said finance minister Shankar Prasad Koirala said, chairing the meeting.

However, donor’s support would play a key role in its effort to graduate Nepal to developing country, he said, adding that Nepal with proper utilization of foreign aid would graduate to developing country status by 2022. “The proposed policy is aligned to approach paper of third three-year interim plan and included the interest of development partners, and aims at restoring the confidence of private sector.”

The political stability after the CA election will ensure the economic growth, the minister added.

Finance secretary Shanta Raj Subedi, on the occasion, informed that the timely budget for the current fiscal year will help spur the economic growth this fiscal year 2013-14.

Addressing the meeting, World Bank country manager for Nepal Tahsin Sayeed asked the government to speed up the process of implementing the long pending economic reform to create investment friendly environment in the country.