Nepal's performance in foreign aid utilisation still below par
KATHMANDU:
The country’s performance in foreign aid utilisation did not improve this year as well, as it received a rating of ‘moderately satisfactory’ despite launching various reform measures to raise the effectiveness of aid.
The score card showed unimpressive result due to poor implementation of ‘Sectoral Action Plan’, which had charted out various measures to bring reforms in areas ranging from local governance to roads and transport management, agriculture and energy, shows the report on Nepal Portfolio Performance Review (NPPR) 2014 released here today.
NPPR, a joint forum of the government and foreign donor agencies, comes up with a report card on aid effectiveness every year after evaluating the performance of projects and programmes funded by development partners.
Evaluations are made based on performance in five thematic areas — public finance management, public procurement,
human resource management, managing for development results, and mutual accountability — in which Nepal received a ‘satisfactory’ rating this year.
These thematic areas cover issues like lowering bunching of budget expenditure in the last quarter of a fiscal year, strengthening internal audits, reducing external audit irregularities, institutionalisation of e-bidding, addressing procurement related issues, reducing the frequency of transfer of government staff and building their capacities, establishing linkages between planning and budgeting, and aiming for improved management of development assistance.
However, to further broaden the scope of the study, NPPR meeting held last year added four more areas — local governance, roads and transport management, agriculture and energy — to the NPPR Action Plan, in which Nepal received ‘unsatisfactory’ rating.
Nepal’s poor performance in NPPR is the result of project start-up setbacks, weakness in budget execution, delay in contract awarding, frequent transfer of key project staff and high-ranking government officials, failure to conduct timely audits and effectiveness of projects, weak performance of contractors and consultants, and absence of effective contract monitoring system, says the report. Also, problems of land acquisition, especially for projects related to energy and roads, have also been
identified as hindrances to project implementation.
“Development partners expect strong political commitment and leadership of the government to advance reforms in NPPR,” said Asian Development Bank Country Director for Nepal Kenichi Yokoyama, who made a speech on behalf of aid agencies working in Nepal. “There is a need for policy dialogue on overall development agenda.”
All development partners of Nepal emphasise on inclusive economic growth for shared prosperity and enhancing the economy’s competitiveness. To improve performance in this regard, donor agencies pledge to funnel hundreds of millions of dollars every year. But Nepal does not have the capacity to absorb these funds and put them to use because of flaws in the public finance
management system and project development cycle.
However, government officials do not want to take all the blame. “Donor agencies at times allocate the budget even when detailed project reports are yet to be ready. Such practice makes it appear that we have not been able to utilise the funds,” said Baikuntha Aryal, head of the Budget and Programme Division at the Ministry of Finance. “Besides, we have to take donor agencies’ approval at every stage of project designing and implementation, which creates delays.”
However, Finance Minister Ram Sharan Mahat said: “We need to identify gaps throughout the project development cycle and collaborate to solve the problems, rather than engage in blame game.”
He also said the country needs the support of development partners as Nepal is at the cusp of a major economic transition, since it is planning to graduate to the grouping of developing nations by 2022.
Source: THT
