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Kathmandu Thursday January 24, 2002 Magh 11, 2058.
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NDF : Begging or development
forum ?
By SANJAY PRAKASH
The Nepal Development Forum meeting has been
slated for 4-7 February 2002 in Kathmandu and Pokhara. The forum will focus especially on
the Nepalese Government’s agenda of priority reform actions, presently in various
states of implementation to solicit inputs for the Tenth Plan along with Poverty Reduction
Strategy Paper (PRSP) preparations. the forum will also to seek inputs and wide donor
support for the government’s plans to introduce a medium term budget framework as a
tool to integrate the tenth plan and PRSP strategies. The government has outlined donor
support in the Tenth Plan and joint government donor commitment to new working strategies
and broad support from donors in narrowing down the financial gap. Although aid has had
some successes, the question can be asked as to whether the quite significant aid volumes
should not have produced more results, particularly among the most disadvantaged rural
population that still represent the overwhelming majority of Nepal’s people. Lately,
there is a growing recognition among many, it not all, donors that the past approach to
development aid simply cannot go on since, even when there are results, their
sustainability is often far from certain.
There is a mistaken notion that a very poor
country like ours cannot take one step forward without foreign aid. It is, however,
regrettable and unfortunate that there has been no development in Nepal in proportion to
the volume of foreign assistance that is pouring into the country. Against this somber
backdrop talk about development through foreign aid has proved a mirage for the Nepalese.
Foreign aid has been highly successful in reducing poverty in countries with sound
economic management and robust government institutions, according to a new World Bank
report.
For effective and efficient utilization of
foreign aid, greater consciousness about the utilization and transparency of foreign
assistance through advocacy and public debates is necessary. The lesson in making use of
foreign aid is even more important because the proportion of loans has been increasing
while grants have been consistently declining. We have to make an assessment of the aid
programme to examine the success in reducing poverty and enhancing human development.
Nepal’s prolonged economic malaise lies in "too much of donors’ meddling in
its national economic management. Nepal fell into the trap due to begging-mania. But for
ensuring future competitiveness of the Nepali economy, we have to rely on foreign aid for
some time.
Foreign aid has played a crucial role toward
fulfilling the Nepalese aspirations of development and also strengthening the balance of
payments situation of the country. It may be observed that foreign aid has been
instrumental in bringing about substantial improvements in areas like education, health,
agriculture, irrigation, hydropower, forestry, roads, other physical infrastructure and
social services. However, the conditions of socio-economic development in Nepal are still
below expectations. The factors to which such a situation could be attributed are mostly
as high population growth rate, low economic growth rate, unproductive and subsistent
agriculture, underdeveloped rural economy, insufficient physical infrastructure and
occasional instability in policy matters along with reduced commitment to reform
initiatives.
Besides government officials, members of
parliament, political leaders, elected local representatives, media, the private sector
and civil society will participate in the preparatory and main events of the NDF meeting.
Consultations on the tenth plan, governance,
financial sector reform, foreign aid policy and review of developmental partnerships and
public debate on economic update will precede the February event. Development bazaar, an
exhibition to highlight partnership between Nepal and the partners, will be held at
Birendra International Convention Centre during the NDF meeting. In Nepal foreign aid has
been a tale of political nepotism, interference, frequent transfers of top officials,
inefficiency and corruption. That bitter message has come from a whole series of donors,
both bilateral and multilateral.
The Human Development Report in South Asia 2001
states that the Poverty Reduction Strategy Papers (PRSP) have drawn criticism for being
little more than reworked versions of standard IMF policy papers that mandate structural
adjustment programmes as preconditions to IMF assistance. A policy dilemma results from
PRSPs in many cases as the implied methods of implementation directly conflict with
elements of Structural Adjustment Programmes (SAP). For example, how will subsidies and
social sector spending be protected from cuts prescribed by SAP ? There is a need to
balance social sector needs with those of economic revival. A satisfactory solution to
this dilemma holds the key to high pro-poor growth.
Why has the nation failed to develop even after
receiving so much foreign aid? In the first place, we have taken foreign assistance as a
consumer item rather than as capital investment. Whatever we receive, we consume.
Secondly, we have taken foreign assistance as something that is available free of cost,
like air and water. This attitude has given rise to various inconsistencies, which are
obstructing the process of our development. We must not, therefore, determine the
philosophy of development through reliance on external sources of finance.
There is a danger that external aid will
continue to shield Nepal from the full extent of its economic mismanagement, merely
postponing and deepening the eventual, inevitable crisis, until the situation finally
deteriorates to the point where circumstances force painful emergency adjustments on
Nepal. To preclude this possibility, we will call upon donors to share in our strategy.
Increasing foreign assistance to Nepal plagued
by politicized and inefficient administration is no better than pouring water into sand.
Lack of transparency both on the part of the government and donors have made matters
worse.
In sum, it is hoped that the forthcoming NDF
meeting will provide the opportunities and challenges to be faced by Nepali poverty
alleviation.
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