Officials at the Ministry of Local Development (MoLD) said they have recently forwarded a proposal to the Ministry of Finance (MoF) on streamlining foreign aid being spent at the local level without prior knowledge of the concerned government bodies. [break]
Among other things, the proposal aims at tightening the screws on the current practices by various embassies and bilateral donor agencies of directly funding projects at the local level.
As per the proposal forwarded by MoLD, the donor agencies concerned will be required first to sign a formal agreement with the government as to how much financial support they wish to extend in the given fiscal year and to what kind of projects. This initiative is aimed at bringing such foreign aid under Nepal´s budgetary system.
Deputy Prime Minister and Local Development Minister Narayankaji Shrestha said the initiative was taken amid concerns from various quarters that the foreign aid Nepal is being misused. “We are grateful for the support we have been receiving from various donors. So our move is only aimed at properly managing foreign aid,” said Shrestha, who also holds the portfolio of foreign ministry.
Once the proposal gets endorsed, donor agencies would not be allowed to directly channel funds to local projects such as construction and renovation of school buildings and construction of roads and bridges, among other things.
The Indian embassy in Kathmandu has been authorized by the finance ministry to directly spend Rs 50-million on projects at local level without bringing the aid under the government´s budgetary system.
But as other countries, including China, recently came up with similar proposal to allow them direct funding, officials said they felt the urgency of the matter. “Since such aid does not come under the notice of government, they not only lack transparency, but also often misused. Our move is aimed at enhancing effectiveness of the aid and ensuring that it is spent on areas prioritized by the government,” said a senior official at MoLD.
Apart from regulating foreign aid meant for the local level, the government is also mulling to review overall Foreign Aid Policy of the country. A cabinet meeting held last week formed a taskforce led by former Chief Secretary Madhav Prasad Ghimire to prepare a draft of the new Foreign Aid Policy that suits broader interests of the country. The committee comprises of members from the finance ministry, foreign ministry and the National Planning Commission.
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