HEADLINE NEWS THE RISING NEPAL (DAILY)

Foreign aid policy draft released for public debate

Kathmandu, July 14 (RSS): The secretaries and representatives of different ministries of His Majesty’s Government have presented suggestions on the preliminary draft report published by the Finance Ministry Foreign Aid Division here today.

Vice chairman of the National Planning Commission Prithiviraj Ligal, taking part in the discussion, spoke of the need for the Finance Ministry to maintain coordination between all aspects of foreign aid, pursue clear cut policies on allowing donor community to get engaged in, bring about balance between loans and grants and mobilize means for sustainable development of the country.

NPC members Dr Shankar Prasad Sharma and Dr. Ramesh Ananda Vaidya said foreign aid polices should be clear at the local level also and strategies should be worked out for economic reforms.

Similarly, the representatives of the ministries suggested that foreign aid be stopped in the long run, policies should be binding for both government and the donor agency, follow-up and inspection of projects should be given emphasis, NGO’s and INGO’s should be taken as a basis for taking foreign aid and the role of NPC and ministries should be made clear.

On the occasion, Finance Minister Mahesh Acharya observed that the government will give a final shape to the draft only after holding discussions with all the political parties, the civic society, intellectuals, the general public and the media and reaching consensus.

Stating that the nation will in the long run have to follow the path of self-reliance, Mr Acharya noted that it is the commitment that counts most in implementing policies.

Earlier welcoming the participants, finance secretary Dr Bimal Prasad Koirala remarked that the draft has been prepared out of our own knowledge and experience, adding that the foreign aid policy should be practical and suitable for the country.

Chief of the Foreign Aid Division of the Ministry Madhav Prasad Ghimire spoke of the need for government and the donor community to find common areas.

Before the preparation of the draft report, the ministry had given the responsibility of analyzing the present situation of foreign aid to Prof. Bishwambher Pyakurel and former secretary Dipendra Purush Dhakal.

The draft foreign aid policy released today by His Majesty’s Government for public discussion has specified infrastructure development, agriculture, irrigation and forestry, and human resources and social development as the priority areas for investment of foreign aid.

Under infrastructure development it has categorized the priority areas as energy sector including hydro power, solar energy and wind energy; transport sector including road and rail transport; rural infrastructure development which includes rural electrification, and roads and bridges; tourism sector which includes infrastructure development in new tourist areas and rural tourism, and science and technology.

Likewise, under the agriculture, irrigation and forestry sector, the policy has categorized the priority areas as geo-utilization, agriculture marketing, improved seeds technology and high value crops development; irrigation and river control, and commercial utilization of forest resources and environmental protection.

According to the draft policy, basic and technical education and manpower development; public health and drinking water; population management and poverty alleviation, development of backward regions and employment promotion have been categorized as priority areas under human resources and social development sector.

The foreign aid policy has put emphasis on gradually reducing Nepal’s dependence on foreign aid for which it envisages improvements in the utilization of aid, resolving operational issues, making aid qualitative, enriching the policy-related matters, and making the economy efficient to raise resources required for development on a sustainable basis.

In this connection, the policy has underlined the need to invest in priority areas, deepen the inter-relationships of priorities, make judicious selection and use of loan, seek grant resources, make limited use of technical assistance, build national capacity, streamline INGOs, ensure leadership and ownership of the government and the people, build partnership, effect institutional reform, ensure full transparency and accountability, and strengthen aid coordination, and enhance the quality of aid.

Similarly, the policy has put emphasis on maximizing the benefit of aid, securing sustainability, utilizing existing investments, effecting favourable improvements in the private sector investments through the foreign aid, directing foreign aid towards the objective of increased revenue mobilization, breaking the tradition of the government being the guarantor of loan and utilization at greater levels the international arrangements made for the least developed countries.

A number of strategies have been worked out for the implementation of the foreign aid policy.

The strategies include formulation of sectoral strategy and perspective plan, properly designed aid conditionalities, reduction in the number of projects, adequacy of pre-project preparation, prudent resource allocation and management, joint programming approach, effective project implementation, shift towards a "common pool" approach, strengthening of financial management and improvement in the disbursements of committed foreign aid.

Likewise, improvement in procurement policies and practices, improvement in project evaluation, impact study, supervision and monitoring, assessment of the effectiveness of foreign aid, formulation of criteria for the acceptance of external aid, rationalization of tax exemptions and facilities, maintenance of uniformity in the treaties and agreements, strengthening of economic and technical cooperation among developing countries, increase in the effectiveness of economic diplomacy, raising the impact of volunteers’ service, strengthening of development cooperation, aid cordination, strengthening of planning divisions of line ministries and expansion of the scope and function of foreign aid coordination division have been mentioned in the draft policy as strategies for implementation of the policy.

The overall objective of foreign aid policy is to make efficient and effective utilization of foreign aid so as to accomplish the goal of self-sustained, high economic growth scenario and to create the situation of self-reliance for mobilizing the resources required for financing the development.

The history of foreign aid in Nepal dates back to January 23, 1951 when the country signed the first ever development cooperation agreement with the United States of America. USAID was the first donor agency to provide development aid to Nepal.

The next development aid was received from India in 2007 B.S. for construction of roads and airports. Development cooperation with China began in 2013 B.S. and with the former Soviet Union, Germany and Japan in 2015 and 2021 B.S. respectively.

Nepal had first received capital loan assistance from India in 1952 and from the USA in 1955.

Currently Nepal receives development aid from more than two dozen donor countries and multilateral agencies.

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