Off-budget foreign assistance growing

KATHMANDU, April 21:

Flow of off-budget foreign assistance is increasing in the country despite the government´s effort to channelize it through budget.

The Development Cooperation Report unveiled on Monday by the Ministry of Finance (MoF) shows the country received only 64 percent of foreign aid through budget in 2012/13. Development partners provided Nepal foreign assistance worth US$ 960 during the review period. However, 36 percent of the amount was off-budget assistance.

In 2011/12, the government had received 77 percent of foreign assistance disbursement worth $1.04 billion through budget. Remaining amount was received through off-budget assistance.

“Off-budget assistance is increasing because of political situation of the country,” senior economist Bishwambher Pyakuryal said. “In 2012/13, political situation was unstable. Constituent Assembly (CA) was dissolved, and the government was preparing to hold CA election for the second time.”

Funds released by development partners to non-government organizations (NGOs) and international non-government organizations (INGOs) have been recorded as off-budget assistance, according to Madhu Kumar Marasini, chief of the International Economic Aid Coordination Division (IEACD) under the finance ministry.

Around 18 percent of the on-budget assistance in 2012/13 was disbursed by bypassing treasury controller offices.

Foreign aid disbursement amount also went down in the last fiscal year. In 2011/12, foreign assistance worth $1.04 billion was disbursed. The amount fell to $960 million in 2012/13. The disbursement was for 508 projects. Education sector received the largest chunk of foreign aid ($140.72 million) disbursed in 2012/13. The amount is 15.67 percent of total disbursement during the year. Similarly, health, local development, road and transport, energy and hydro sectors, received $128.51 million, $118.28 million, $108.73 million, and $90.73 million, respectively.

The World Bank was the largest donor in the review year with total disbursement of $391 million, followed by Asian Development Bank with US$ 273 million.

United Kingdom ranked top among bilateral donors, with total assistance of worth $89.99 million, followed by the US with $67.19, Japan with $65.75 million, and India with $63.81 million.

The government received $57.6 million in grants, $172.8 million in loans and technical assistance worth $201.6 million during the year, according to the report.

Some development partners took back the aid due to the lack of spending capacity of the government. German development agency took back $2.08 million from assistance extended to the Support to Peace Process (STPP), while Swiss Development Cooperation (SDC) took back $2.28 disbursed to franchising skill development project.

Source: Republica