Government signs Rs 17.27 billion worth foreign aid

The care-taker government has signed Rs 17.27 billion foreign aid agreement in the first two months (Shrawan and Bhadra) of the current fiscal year.
"Out of the total aid, Rs 9.24 billion is grant and almost the half Rs 8.02 billion is loan," according to the finance ministry.
However foreign aid mobilisation with a demand driven approach towards the prioritised sectors has been a key challenge. "To coordination and effective mobilisation of foreign aid, the finance ministry has finalised manual for 'the High level committee on coordination and mobilisation of foreign aid'," the ministry said.
The committee -- led by the finance minister -- will take stock of the relevence of foreign aid that is one of the key component of the public expenditure.
Though it was envisioned first in the Foreign Aid Policy 2002, the committee has been formed after a survey last year reported that the foreign aid coordination and mobilisation could not be as effective as it should be. "Apart from formation of committee, the ministry has also started reviewing the Foreign Aid Policy that is nine years old and need urgent revisit," the ministry said.
The Foreign Aid Policy states that it will rank development sectors with their priorities in achieving self-sustained economic growth and alleviation of poverty; deepen the interrelationships of priorities; separate the project identification from the potential funding source until final selection; mobilise aid resources systematically according to development approach; streamline and limit the task of project identification at the levels of beneficiaries, line agencies and the National Planning Commission (NPC) and inform the donors about the national priority sectors and projects/programmes regularly.
But there has been duplication in some of the programmes and government could also not develop its absorbing capacity, said the Finance Ministry source.
"For the maximum utilisation, foreign aid has to be utilised on the projects Nepal owns," he said adding that the commitment could help government plan resources for this fiscal year. "In the last fiscal year, foreign aid had a contribution of around 30 per cent in the total budget."
Nepal had received almost double to almost Rs 92,288.48 million foreign aid commitment -- including loan and grants from bilateral and multilateral agencies -- in the last fiscal year compared to 2008-09.
At a time when the government's absorption capacity is under doubt, the country received Rs 92,288.48 million foreign aid commitment in 2009-10, whereas it was Rs 47,975.23 million a fiscal year ago.
"But the more foreign aid means, the country will be less economically free," said former secretary and senior economist Dr Bhola Chalise. Nepal ranks among the least free economy in the World Economic Freedom report that has ranked Nepal at 121 among the 141 global economies.
However, foreign loan has been playing key role in the domestic economy. The net outstanding foreign loan totaled Rs 249,965.4 million in the fiscal year 2007-08, which further increased by 10.8 per cent reaching Rs 277,040.4 million in 2008-09.
The budget of fiscal year 2009-10 had targetted Rs 78.51 billion in foreign assistance that was 27.45 per cent of the total budget of Rs 285.93 billion.

Nepal still 'least free' country economically

Nepal ranks 121 acoring 5.54 among the 141 economies in the Economic Freedom of the World Report released today in Nepal by Samriddhi -- The Prosperity Foundation -- in association of Society of Economic Journalists-Nepal (Sejon).
The report shows that over the last one decade economic freedom has steadily regressed in Nepal to 5.54 this year from 5.75 in 2000.
"Though Nepal’s rank has slightly improved this year with a score of 5.54 because of the decrease of score of other countries, Nepal’s economic freedom score has in fact decreased from last year’s score of 5.68," said senior economist and former secretary Dr Bhola Chalise.
"Nepal continues to be one of the least free countries in the world in case of economic freedom," he said, adding that the areas that caused a decline in Nepal’s overall performance are size of government, access to sound money, freedom to trade internationally and Regulation of Credit, Labour, and Business.
"The only area where Nepal improved slightly is legal structure and security of property rights, with its score (rank) going up from 3.40 (112) to 3.51 (111)," Chalise added. "Nepal capacity to trade internationally has taken a plunge over last one decade."
The annual peer-reviewed Economic Freedom of the world report is produced by the Fraser Institute -- Canada’s leading public policy think-tank -- in cooperation with independent institutes in 80 nations and territories.
The Report uses 42 different measures to create an index ranking countries around the world based on policies that encourage economic freedom. The cornerstones of economic freedom are personal choice, voluntary exchange, freedom to compete, and security of private property. This year’s publication ranks 141 nations representing 95 per cent of the world’s population for 2008, the most recent year for which data is available.
"Economic freedom is measured in five different areas like size of government, legal structure and security of property rights, access to sound money, freedom to trade internationally, and regulation of credit, labour, and business.
The Report shows that individuals living in countries with high levels of economic freedom enjoy higher levels of prosperity, greater individual freedoms, and longer life spans. This year’s report also contains a new research showing the impact of economic freedom on the rates of unemployment and homicide. "Increase in economic freedom decreases homicide and unemployment rates," according to the Report that also shows that countries with more economic freedom have substantially higher per-capita incomes, higher growth rates, Life expectancy is about 20 years longer in freer countries.
People living in countries with more economic freedom report more life satisfaction. With fewer regulations, taxes, and tariffs, economic freedom reduces the degree of corruption.
Hong Kong maintains the highest level of economic freedom worldwide, with a score of 9.05out of 10. The other top scorers are Singapore (8.70), New Zealand (8.27),Switzerland (8.08), Chile (8.03), the US (7.96), Canada (7.95), Australia (7.90), Mauritius (7.82), and the UK (7.81).
Zimbabwe maintains the lowest level of economic freedom among the 141 jurisdictions analysed, followed by Myanmar, Angola, and Venezuela
Initiated by Milton Friedman, one of the most famous economists of 20th century and Michael Walker, the founder of Fraser Insitute and prepared by Fraser Institute, a leading think tank based in Canada, the report is supported by Economic Freedom of the World Network’s member organisations in more than 80 countries all over the world.