In a report submitted recently to the government, the commission has pinpointed the lack of long-term vision, wide gap between approval and disbursement, and failure of the government to lure assistance in the priority sectors as major weaknesses in the country´s aid management. [break]Apart from these, implementation level complexities, low financial discipline and least effectiveness of technical assistance too have affected Nepal from making effective use of foreign aid, the report states.
“Hence, the government must come up with effective and meaningful long-term vision so that aid coming in the country could spur development meaningfully,” the commission said in its report.
It had dissected trend of foreign aid approval, disbursement, usage and nitty-gritty of aid operations during the study.
In its finding, the commission has noted that the government suffers from serious dearth of capacity to utilize foreign aid. According to the report, Nepal has managed to utilize only 60 percent of the total approved aid so far.
“This situation must be corrected because full utilization of available assistance is critical to give momentum to development works and narrow down the budget deficit,” the report states.
The commission has also expressed serious concerns over low flow of foreign assistance in crucial sectors like agriculture in which the largest chunk of populace still rely on for livelihood and income. In fiscal year 2008/09, the sector had drawn only 6 percent of the total foreign aid the country received.
The commission has also unearthed laxness on the part of the government in claiming reimbursement from donors. In 2008/09, such unclaimed amount was well over Rs 22.13 billion, whereas it was just Rs 3.23 billion in 2004/05.
“This indicates serious lacking on the part of the government to claim and follow up for the reimbursement,” states the report.
The commission has urged the government to make foreign aid more responsive to country´s development needs and its management more accountable to service seekers. In this connection, it has mainly pushed for result-oriented aid management, reforms in public finance operations, financial discipline and constant monitoring of expenditure.
Among others, the commission has also suggested the government to operate with well-developed 10-year aid requirement, projections and ways to manage it. This is very critical to meaningfully translate aid into outcomes that fulfills people´s socio-economic aspirations, states the report.
The report further notes that Nepal´s total outstanding overseas loans as at mid-July 2009 was Rs 277.04 billion. This made per capita loans liability stand at Rs 15,000. The total loans liability was 42 percent of the gross domestic production (GDP).
It pinpoints that the volume of foreign aid has constantly soared over the years. Trend shows that Nepal has started receiving more grant than aid since 2002/03. For instance, Nepal had received 70 percent of aid in grants in 2008/09.
The commission has attributed this change in proportion of loans and grants to selective approach adopted by the government while accepting loans, and growing support of multilateral agencies to the peace process.
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