23 pc of foreign aid still out of budget system
KATHMANDU, Oct 3:
Though the government is urging development partners to extend financial supports under the government´s budgetary system, it has been revealed that 23 percent of the total foreign assistance is still out of budgetary system.
“More than 23 percent of the foreign aid coming to Nepal is still remaining out of the budget system of the government. This trend has hampered our efforts to maintain transparency in foreign assistance,” Chiranjibi Nepal, chief economic advisor at the Ministry of Finance (MoF), said at a meeting with local representatives of development partners held on Wednesday.
The meeting was organized to discuss on the draft of Nepal´s Development Cooperation Policy (DCP) 2013 -- a revised name of existing Foreign Aid Policy (FAP) - and gauge the effectiveness of foreign assistance to Nepal.
In addition to Official Development Assistance (ODA), donors have been extending supports for different programs through non-governmental organizations.
“If we succeed in channelizing foreign assistance through government system by establishing more transparency, it will help in the proper utilization of external assistances,” said Nepal.
Hailing the role of remittance in poverty reduction, Nepal stressed the need to make foreign assistance effective so that people can take benefit from it.
Chairing the meeting, Finance Minister Shankar Prasad Koirala said donor´s support would play a key role in Nepal´s effort to graduate to the status of ´developing country´. “We are committed to properly utilize donnors´ money so that we can spur economic growth and achieve our target of achieving the developing country status by 2022,” said Koirala.
The Approach Paper of three-year development plan of the government has set a target of attain the developing country status by 2022.
Koirala also claimed that confidence of private sector has been restored with the announcement of annual budget and authorization to spend the budget in time this year.
Speaking on the occasion, Finance Secretary Shanta Raj Subedi said the growing trend of channelizing foreign assistance outside the budgetary framework should be discouraged. “Rising government liability for counterpart fund due to weakening of rupee vis-à-vis US dollar and growing trade deficit are the other challenges that the government has been facing,” he said.
Nepal has been facing daily trade deficit of Rs 1.5 billion as the country is passing through weak export capacity on the back of slowing industrial sector.
Presenting highlights of the draft of DCP, Madhu Kumar Marasini, joint secretary at the MoF, said the draft is mainly focused on establishing a system to accept and mobilize foreign assistance in line with the government policy and system so that it could be utilized for the greater benefit of the people in a transparent manner.
The DCP envisages an environment to accelerate economic growth through effectively utilization of foreign aid in line with the government policy and system, create an environment for private sector growth, trade enhancement and formulate a mechanism for effective implementation of donor funded programs, among others.
Speaking on the occasion, Tahsin Sayeed, World Bank Country Manager for Nepal, urged the government to speed up the process of implementing the long pending economic reform to create investment friendly environment in the country.
“Creating public confidence on government alone is not sufficient. Retaining the confidence for longer period is equally important for better investment environment,” said Sayeed.
She also said building capacity of the government and enhancing good governance are equally important for proper utilization of foreign assistance. She also voiced concern over frequent transfers of senior officials of the key ministries.
Representatives from other development partners also stressed the need to introduce system for proper utilization of foreign aid.
Source: Republica
