Sunday, August 12, 2018

Government plans to mobilise foreign aid through budget

The government is planning to mobilise foreign assistance either through budgetary system or a separate basket fund to ensure effective utilisation.
Speaking at a meeting of the Economic Committee – under the House of Representatives – today finance secretary Rajan Khanal said that the government has now realised the need to change modality of the foreign aid and grants mobilisation system.
Currently, donors are allowed to mobilise funds through NGOs and I/NGOs after signing an agreement with the government agencies. "If the foreign assistance is brought under the budgetary system, the government would have a management control on it so that the income and spending would be more transparent," he said, adding that the fund would be utilised in a more productive way. "It was discovered that many foreign donors typically pledge to provide a large amount of funds initially but later don’t fulfill their commitments."
“In many cases, donors also impose a number of conditions when they provide aid,” he added. "The development partners are even found approving money to projects that haven’t made proper preparation in advance.
The country has been able to utilise only half of the committed amount in foreign assistance in the last four years, according to the foreign aid report prepared by the Finance Ministry. "Apart from underperforming, a large chunk of foreign grants and loans that Nepal has been receiving are invested in areas where there are already projects and programmes set up causing duplication," Khanal added.
Also in some cases, received assistance has also remained unspent due to various issues including the land compensation.
"As the government does not have the reserve fund of the past year, we have to rely on foreign aid to run development projects," he said. "So it’s time to revise the policy on foreign aid disbursement to get maximum benefit."
The development partners have also committed to increase foreign aid for smooth operation of the country’s federal system. During finance minister Dr Yubaraj Khatiwada’s recent visit to the World Bank Group headquarters in Washington DC, they have pledged to double support to Nepal from 2019.

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