KATHMANDU, June 5: Amid a shortage of resources for national development, the government has failed to secure the anticipated grants from foreign donors. In the current fiscal year 2023/24, the government had set a target of receiving Rs 49.943 billion in foreign grants but has managed to receive only 5.5 percent of that target over 10 and a half months.

According to the Ministry of Finance, only Rs 2.758 billion has been received in grants as of June 3 this year. Delays in development work, procedural complications, weak spending capacity, and overly ambitious targets have hindered the government's ability to secure foreign grants, raising concerns.

Dr Shiva Raj Adhikari, a member of the National Planning Commission, highlighted the issue. "Due to procedural difficulties and policy problems, grants have not been received as per the target," he said. "It is a challenge to secure foreign grants."

When preparing the budget, the government relies on revenue, internal debt, foreign debt, and foreign grants as sources. Economist Dr Posh Raj Pandey explained that the shortfall in foreign grants is partly due to Nepal's transition from a less developed country to a developing country, resulting in less grants and more loans from donors.

"Since Nepal is preparing for an upgrade to a developing country, donors prefer to provide loans rather than grants," he said.  

The government not only seeks grants but also takes foreign loans. The revised estimate for foreign loan mobilization is Rs 145 billion for the current year. As of mid-April, the government has taken Rs 191 billion in loans, with an estimated Rs 240 billion expected from internal debt for the current fiscal year.

In the current year's budget of Rs 1.751 trillion, the target for revenue collection was revised to Rs 1.423 trillion during the mid-term review. However, only Rs 876 billion has been collected so far.

For the next fiscal year 2024/25, the target is to raise Rs 52.33 billion from foreign grants within a budget of Rs 1.863 trillion. Finance Minister Barsha Man Pun's ambitious budget projections come despite failing to secure even Rs 3 billion in foreign grants this year.

Among the expenditure sources estimated for the next fiscal year, Rs 1.263 trillion is expected from revenue and Rs 52.33 billion from foreign grants, leaving a shortfall of Rs 547.7 billion.

To cover this deficit, Rs 217.67 billion will be raised through foreign loans. The budget also mentions that Rs 330 billion will be covered by domestic debt to bridge the gap when revenue and foreign aid fall short.

 
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