Infrastructure largest recipient of donor money
KATHMANDU, MAR 23 -
The government has accorded top priority to infrastructure development, and donors have responded by directing the largest share of their aid towards this sector this fiscal year.
According to the Finance Ministry, the energy sector has so far received the highest foreign aid pledges followed by local development and agriculture. Interestingly, no aid agreements have been signed with donors for the education and health sectors. Traditionally, the social sector— education and health—used to receive the largest chunk of donor money.
The Finance Ministry’s latest data shows that the energy sector received aid pledges of Rs 19.12 billion out of the total aid commitment of Rs 39.26 billion. Of the 11 agreements signed with donors this fiscal, three are related to energy.
Due to a large aid pledge by the Japan International Cooperation Agency (JICA) worth US$ 184 million (Rs 13.65 billion) for the Tanahun Hydropower Project, this sector has emerged as the largest recipient of foreign assistance so far this fiscal.
With the Asian Development Bank (ADB), European Investment Bank and Abu Dhabi Fund for Development also planning to make aid pledges for the Tanahun project soon, the energy sector will probably emerge as the largest recipient of donor money this year. “Although the amount of foreign aid received for the energy sector is not very high currently, it will definitely go up provided the pledged amount is spent well,” said Kailash Pokhrel, under secretary at the Finance Ministry.
Till the third week of March, there have been pledges of Rs 7.56 billion for local development and Rs 6.9 billion for the agriculture sector. Sectors such as home affairs, supply, governance and water supply come after them.
With the country suffering from an energy shortage, the government has given greater importance to the power sector. Likewise, the infrastructure sector has been accorded greater priority after the peace process began. “For the last few years, we have been seeking foreign aid for bigger projects related to infrastructure whose effect would be tangible in the economy,” said Pokhrel. “Our priority has been to invest foreign aid in big infrastructure projects while increasing the country’s resources to the social sector.”
The surge in donor assistance for energy and infrastructure is result of donor response to the government’s priority. The trend of donor assistance in the last two years illustrates this fact. Energy and infrastructure sectors were the two biggest receiver of donors’ money last fiscal year also. According to the ministry, the energy and infrastructure sectors had received aid commitments of Rs 32.70 billion and Rs 16.28 billion respectively, followed by education with Rs 8.99 billion and local development with Rs 8.59 billion.
“The need of hour for the country is to invest heavily in the infrastructure sector to achieve economic benefit quickly,” he said. “The surge in foreign aid in this sector is welcome,” said Dipendra Bahadur Kshetry, vice-chairman of National Planning Commission.
Among the bilateral donors, Japan tops the chart with aid commitments of Rs 13.65 billion followed by the UK, Denmark and Norway. The UK’s Department for International Development (DFID) has given grants of Rs 5.11 billion for the Rural Access Program, Phase III while Denmark has provided Rs 3.13 billion for the National Rural and Renewable Energy Programme.
Among multilateral donors, the Asian Development Bank has provided the highest assistance of Rs 4.65 billion followed by the World Bank and IFAD.
Source: The Kathmandu Post
