The draft was recently forwarded to the Development Partners (DPs) for their feedback and suggestion, according to the officials. The draft proposes not to accept concessional loans of a value below 10 million US dollars and grants of a value below five million US dollars per project.[break]
´With the changes in DPs aid strategies, global commitments made in international forums, the ever expanding aid volume and sector, along with the changes in Nepal´s development policy and priority as a result of changes in the country´s political, social, and economic situation, the new policy was imperative to substitute the current foreign aid policy,´ states Finance Minister Shankar Prasad Koirala.
According to Minister Koirala, dire need was felt to devise a new policy for mobilizing development cooperation for increased results in line with the national policies and priorities and to graduate Nepal from LDC to a developing nation and sustainable economic growth and widen economic opportunities.
´To distribute the dividend of democracy to the poor people, improving quality and effectiveness of development cooperation, increasing focuses on ownership, results and accountability, making transparent and responsible cooperation, promoting sustainable development and south-south cooperation and encouraging private sector is the need of the hour,´ said Minister Koirala clarifying the need of the new policy.
Nepal has been receiving foreign aid for the last six decades for the socio-economic development of the country. According to the Ministry of Finance, the volume of foreign assistance committed by DPs has been steadily increasing reaching Rs 115.15 billion in the fiscal year 2013/14 from that of Rs 41.11 billion in fiscal year 2002/03.
The contribution of foreign aid to the national budget in the current fiscal year is about 22 percent, which is about 6.6 percent of the Gross Domestic Product, informed Madhu Kumar Marasini, chief of the International Economic Cooperation Coordination Division of the Finance Ministry.
´There are currently 500 foreign aid funded projects under implementation with the engagement of 11 DPs in average in one sector,´ he said.
The draft of the policy provided to the DPs for their feed-backs and comments obtained by RSS prohibits mobilization of funds from loans for the technical assistance and procurement of goods and services.
According to the draft, the government intends to mobilize non-concessional loans in sectors like hydropower including transmission lines, highways, strategic road networks and bridges, railways, airports, dry-ports and large irrigation projects.
In supporting the vision of the policy and in helping graduate Nepal from LDC by 2022, focus will be given to boost trade, particularly export, as an instrument of growth and poverty alleviation, in order for dependency on aid to be reduced gradually.
The new draft underscores on the ongoing efforts to mobilize aid resources, to address the trade-related constraints including investment friendly environment, infrastructure development, removing non-tariff barriers, and promoting trade facilitation through the help of various DPs.
The government and all its DPs are signatories of the Paris Declaration on Aid Effectiveness and adhering to the principles set in the declaration the donors should base their support on the partner country´s development priorities, polices and strategies. The DPs must deliver aid using recipient country´s system for managing development activities.
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