Inner-View (Business Age)

Inner-View

We Should Show Performance to Get More Foreign Aid: Dr. Mahat

Nepal Development Forum (NDF) meet concluded recently in Kathmandu. How do you term it ? What sort of assurances you received from donors for Nepal’s long term development? What conditions donors have set while giving aid?

I would term the NDF meeting as a very successful event— successful in the sense of donors’ support to our ‘programs and policies’. Donors have supported what the government intends to do. There was an appreciation from the donors to the problems faced by the country. They had their understanding to our ‘sincerity and commitment’ for the goals and objectives. Secondly, it was successful also in terms of getting donors’ commitment to meet the shortfall (resource gap) in the coming 10th Plan. They indicated that support from the international community would continue and could even increase if we can show that we can bring about improvement in implementing our projects and programs and, if we could show to them that there is better delivery of service and also these people on ground get the services in time and their living standard is also increased.

The government has pledged to ensure good governance under the present socio-economic and political condition, is it really possible to deliver good governance?

Good governance is not just ideal. It can happen. We can make that happen provided that there is commitment from all sides. The leadership is committed to ensure good governance. We are all committed to bring about improvement in our administration. Also there is clamor for better governance from, actually, every sections of the society. If we can put the words to action, if we can translate our ‘intentions and commitments’ into real actions, good governance is very much possible.

It is a fact that you did hard work to make NDF meet a success . Do you admit that donors were critical this time ? Did they feel that Nepal has really to toil hard for economic upliftment in a changed global environment ? And what do you feel are the major obstacles created by the government for effective utilization of aid ?

Donors have been very frank in their views. This is not the first time that they have expressed their concerns about the problems the country is facing. I had led delegation in the past also in the Paris meeting. They had expressed critical voices then also. Only thing is that it was open this time, it was transparent and it was televised.

As I said before, you have to show by performance. Implementation and performance are the key words. We are in a very competent global atmosphere in the sense that development assistance is sought after by too many countries. There are more countries now seeking development assistance than in the past. That way the environment is competitive. Naturally, more resources go to those areas and to those governments who show better performance. That was the message we got from NDF meeting.

The government as such has not created any obstacles. The only problem is that our ‘development administration’ is not very efficient. There are inefficiencies and leakages as a result of which the results on ground are not in keeping with investment we have made. That is the problem.

As we know so far that there is no effective coordination among ministries that has hampered the proper utilization of aid? What you have to say in this regard?

That is true that there is no effective coordination among ministries. In fact that is the reason we involved all ministries in the process of NDF meeting this time because of complain of lack of ownership on the part of all the government ministries and institutions is often heard. There was even a tendency that ‘negotiation’ is done by the finance ministry and it is finance minister’s job. That type of attitude also sometimes we can see. Just to avoid that, we tried to involve all ministers in all preparatory and final meetings in NDF this time, so that we have better coordination. What we are emphasizing now is that individual ministry or agencies don’t directly negotiate with the donor community. All aid is channeled through the Ministry of Finance. We will be on the driver’s seat. We are the one to coordinate external assistance. That is one essence of new foreign aid policy of the government, which has now been approved by both the government and external agencies. Some finishing touches remain which will be completed within a few days.

How do you rate the donor-funded projects in the past? Are there any example of worth mentioning ?

There are many ‘good as well as bad’ examples. There are many projects which have produced very good results. Also at the same time, there are bad cases also.

To name a few, some of the projects in hydropower sector which have been doing very well. Those hydro-projects, which have helped the country’s economy, include Kulekhani, Marshyangdi, Trishuli, among others that have produced very good results wherein big foreign investment is made. These projects have increased government’s revenue also. At the same time we have been able to pay back loans we have taken. There are various road projects, which have done very good as well.

At the same time, there are bad cases also. Look at Narayani Irrigation and Chitwan Irrigation. They have failed due to wrong technology and wrong design involving high cost. Ultimately, we have to pay back. So we have to be careful in future. That is why we say that the government has to have upper hand in identifying our priorities, choosing our projects also, designing of the projects, among others. So what we don’t accept anything suggested by outsiders.

Do you admit corruption from both the donors and the recipients? If yes, how serious are they? And what mechanisms you are adopting to curb it ?

Corruption is an important issue. It is an acknowledged reality. But much of it has been exaggerated. To handle this problem, it requires total efforts from both sides not just from government side but also from development partners, because corruption takes place in big national and international procurements. So that, both the government and development partners will have to work harder and block the possibilities of leakage and underhand dealings.

We don’t lack mechanism to curb corruption. We have so many enforcement agencies likewise Commission for the Investigation of Abuse of Authority (CIAA), Special Police, we have various laws, among others. Corruption is something, which is not visible. It requires real efforts. It is a cultural problem also. There is a need to change the attitudes of the people. Not only that enforcement machinery must be made stronger.

Where does Nepal stand as a LDC vis-a-vis other LDCs from donors in terms of aid receiving country ? How do you they perceive us?

Nepal is still a favored country for international assistance. There is no doubt about it. Foreigners love this country and its people. Many donors do have fascination with this country. We cannot complain of lack of donors’ interests in Nepal. I have seen many people because I have experienced working in international organizations. Most people love to come and want to do something.

Are you confident that given the current deteriorating economic situation, the GDP growth rate envisaged in 10th Plan is achievable which is estimated to register 6.2 per cent ?

You see, if peace is restored, our economy has not deteriorated that much to achieve our set targets. The fundamentals are still sound. We have built capacity and have the right legislative framework to encourage the private sector. We have very capable manpower. We have built up the manufacturing capacity also. We have experienced a lot with the performance of export trade, tourism and manufacturing during the last decade.

Present economic problem is not by economic factor but non-economic factors. Security situation, problem of terrorism, national and international factors that have all propelled the present situation where we may not be able to achieve higher growth. But that does not mean that we cannot revive economy. If we can get over the terrorism problem and peace is restored, we can easily strike 6.2 per cent growth rate. But if the problem of security situation deteriorates, then target is not achievable.

In whole NDF meet tourism sector was missing which gives huge foreign currency to the national coffer. Why this is so although all other sectors were highlighted to a great extent during the meeting ?

That is not true. In fact, tourism is a modern sector wherein enough private investment is coming. We are not asking for development assistance for the tourism sector. Similarly, we did not talk of exports and manufacturing simply because these are the areas where private investment will be coming. Emphasis in the NDF meeting was more on development assistance, the institutional and other reforms that we must be putting through. But even the tourism sector has not been completely ignored, we are having assistance from various partners, we have been availing of assistance from Asian Development Bank (ADB) for the tourism sector. Similarly, various bilateral assistance is also availed of for the restoration of our heritage, monuments, cultural sites, which would ultimately help in the promotion of tourism. But in the NDF meeting, we did not talk of single projects, we talked of overall programmes, resource gap, development issues, our priorities and programs, etc.

You have been a champion of free market economy in Nepal. What are your further strategies and plans to rescue the wounded economy from further injuries ?

As you are aware that we announced the package of reforms even in our last budget for rescuing our industries from further collapse, especially to those industries which have suffered because of internal and external shocks. Recently, we have taken some policy decisions to rescue tourism industry, export industries, among others. We have announced some rescue measures to encourage the businessmen. But there are other sectors where we have to further implementation like the use of domestic goods in government offices and agencies. There we should do further works so that our industries like textile and footwear can be revived if we sincerely implement what we announced in the last budget and what we incorporated in the recent Aarthik Niyamawali (Finance regulations) making obligatory of a part of the government offices and institutions, to compulsorily use Nepali products and services provided the cost and quality of production services are fully assured.

Do you believe that donors will give aid continuously for five years at the tune of US $500 million annually ?

As I said before, it all depends on our performance of how we bring about improvement in our development administration. This is an indication of assistance. This is not the guaranteed figure. If we perform well, I am quite hopeful this assistance will be forthcoming.

From now and then, the government has raised the issue of economic diplomacy. So far what has been done in this direction ?

Some work has been done when I was minister of external affairs. We could then define what economic diplomacy means, what should be the work of our missions, we even had a three year’s plan for ministries and embassies to expedite the work of economic diplomacy. But I don’t know what is the status at present about it. I had made it obligatory part of each embassy to send out reports to the ministries on a monthly basis regarding the achievements they have made with respect to five indicators of economic diplomacy. But I am sure there is more consciousness about the need to pursue economic interests, there is greater awareness about such issues. You cannot achieve results overnight.

Regarding the achievement we have made so far in economic diplomacy front, there is a positive trend about the exact achievement but how much has been achieved I cannot say.

There are five indicators to evaluate the performance of diplomatic missions abroad. The performance of missions should be evaluated in terms the development assistance, tourism sector’s growth, foreign employment, trade (how much our embassies have been able to push Nepalese export to other countries) and foreign investment. However, all diplomatic missions cannot pursue all these goals. It all depends on their geographical location.