Aid Accountability
FOREIGN aid utilisation is a matter of
continuing concern to both Nepal and its development partners. Many a times in the past
Nepal's bilateral and multilateral development partners have voiced their concern about
less than optimum utilisation of foreign loans and grants. Nepalese officials have
admitted that aid utilisation has not been as it should be. It is generally felt among the
public that despite the pouring in of foreign aid into Nepal, particularly over the past
decade, a positive impact on the socio-economic conditions of the poor Nepalese has not
been seen. This has led to queries from the public and the civil society as to the
effectiveness of the foreign aid that has generally come Nepal's way without special
efforts on the part of the government, especially since the restoration of democracy in
1990. Foreign aid constitutes 70 per cent of the country's annual budget and it plays a
significant role in Nepal's development efforts. According to the 2000/01 budget, the
ratio of grant to loan was 34:66, but only 50 per cent of the foreign grants figured in
the national budget, with the result that there is no reliable information on the grant
assistance received till date. Only 35 per cent of the grant money, as reflected in the
budget, is in the form of cash. The remaining amount is through commodity grant, direct
grant and reimbursable grant.
Proper aid utilisation has to begin with
accountability and transparency regarding how much aid is flowing into Nepal. Therefore,
Auditor General Bishnu Bahadur K.C. had a point when he said at a programme the other day,
that in order to maintain accountability and transparency of foreign assistance to Nepal,
all such aid coming either in the form of grant or loans "without any exception"
should be brought under the framework of the national budget. As is the practice so far,
grant assistance is not well reflected in the annual budget which, according to K.C., is
the root of the problem. It is obvious that when a large part of the grant is missing from
the total national budget, a clear picture of the national income and expenditures is also
absent. Thus economic indicators become unreliable and the government's fanancial
activities become unclear. Transparency in aid flow is a must for aid accountability and
managing the country's external resources better.
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