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Kathmandu Thursday May 17, 2001 Jestha 04, 2058.
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Two-fold rise in
foreign aid commitments
By Ram Sharan Sedhai
KATHAMNDU, May 16 - Notwithstanding the aid reduction policy
of the donor countries, there has been a considerable increment in the inflow of foreign
Official Development Assistance (ODA) commitments.
According to the Ministry of Finance, approximately Rs 29
billion foreign aid has been committed as of mid-May 2001 and the figure is expected to go
as high as Rs 36 billion by the end of the fiscal year. Once the aid comes, it will be a
two-fold increment against Rs 18 billion as committed last fiscal year.
During the first eight months of the last fiscal year,
various donor agencies and countries committed a modest amount of Rs 11 billion aid.
Although the two major donors - the United States and the
World Bank - have not committed any aid so far, the amount has gone up notably. Thanks
largely to the much-talked-about Melamchi Drinking Water Project (MDWP).
The Asian Development Bank (ADB), the Japanese Government and
the Norwegian Government have committed an ODA of over Rs 13 billion only for MDWP.
Madhav Ghimire, Chief of Foreign Aid Division at the Ministry
of Finance, says that the government’s commitment towards its continuation in
financial sector reforms significantly helped to send good signals to the donor community.
"Two things have contributed to raise the foreign
assistance: one, the donor community believes that Nepal has been successfully
implementing the process of financial sector reforms, hence it deserves assistance. And
the second, we are constantly making efforts to win the confidence of the donor
agencies," said Ghimire.
Another factor pushing up the inflow of foreign assistance is
the image that Nepal created in the latest Aid Group meeting held in Paris in which Nepal
reiterated strong commitment towards the second phase of economic reforms and to accord
top priority to the financial sector reforms. Unlike in the past, the amount of loans is
higher than grants and the trend indicates phenomenally growing loans in terms of grant in
the current fiscal year.
Nepal heavily depends upon foreign assistance for its
development activities as more than 65 per cent of the total development expenditure comes
from foreign assistance. The budget for the current fiscal year also sought about Rs 31
billion for development expenditure from foreign loans/assistance.
The MDWP became the largest single project to absorb major
chunk of the ADB’s assistance, which touched Rs 12.78 billion. Of the total
assistance, Rs 8.83 is loan while Rs 243 million is grant. The total loan also includes
loan for crop diversification and institutional and financial reform projects.
Japan has positioned itself as the biggest donor country by
committing Rs 3.30 billion in loan and Rs 2.67 billion in grants for 10 different
projects.
The United Kingdom comes to the third position, which has
committed to extend a grant of Rs 2.7 billion, making itself the biggest grant
extender.Similarly, Norway, Belgium and Denmark have committed to provide grants.
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