Trading Charges

Government and donors blame each other for the failure of foreign aid in the country

By A CORRESPONDENT

The fingers are pointed at each other. While donors blame the poor government policy for poor utilization of foreign aid, the government allege that foreign assistance are tagged with too many conditionalities by donors.

TU library : Under utilized aid

This became evident at a program "Assessing aid and development" organized in the capital by Asian Development Bank, DFID (British bilateral agency), UNDP and the World Bank last week.

Even as both sides agreed that foreign aid is not being properly utilized in the country, they had steep differing reasons to say so. Donors pointed at corruption, political instability, red tapism, among others, as the main culprits obstructing the effectiveness of foreign aid.

"There is a clear correlation between the foreign aid flow and good policy," said David Dollar, a World Bank Expert, indicating that foreign assistance may be in decline in absence of a conducive policy. "Countries with good policy have received more aid, or at least their aid hasn't declined."

According to Richard Vokes, Resident Representative of the Asian Development Bank, foreign aid has failed in Nepal due to weakness in policies and their implementation, corruption, frequent changes of project managers, inadequate attention to issues of ownership, lack of internal resource mobilization and population growth.

"The development scenario, however, is not as disastrous as some would make it although it has fallen short of expectations."

Government officials, however, claim that the donors themselves take back huge chunk of their aid as consultant fees. They also charge that donors are inclined to provide technical assistance thereby siphoning big chunk of aid back home.

"Donors are over generous at providing technical assistance," says Ram Binod Bhattarai, Secretary at the Finance Ministry. "This adds to the cost of the project and also delays the project tenure."

Local development experts agree that donors themselves get the lion's share of development assistance they provide. Under the headings like feasibility study, technical manpower and procurement of necessary materials, donors pocket hefty portion of the aid.

They point at completed projects like Bagmati bridge at Thapathali, many highway roads, among others, that were constructed spending way above the normal expenses. "All because the major chunk of the money was taken away by the donors."

Prithvi Raj Ligal, Vice Chairman of National Planning Commission, said that aid has helped develop infrastructures but at the same time increased dependency on foreign resources at the cost of internal resource mobilization. "The conditionalities that the donors tag with their assistance should be based on realities."

Ever since it began receiving aid in the early 50's, when the US Government under Point Four program provided Nepal with grant, Nepal has received 350 billion Rupees (at the current exchange rates) as aid, according to experts. Annually, the Kingdom receives around 400 million US Dollars as foreign assistance.

Interestingly, the government does not have a policy on foreign aid as of yet. While the government has already come under fire for not having prepared the policy, the intention of the donor community has also been questioned as to why did they not pressure the government to prepare the document all these years.

"Donors have to be as strict with corruption as they are with other conditionalities like price-rise," said Mangal Siddhi Manandhar, former Vice-Chairman and CPN UML Lawmaker.

"The government is preparing a draft of the aid policy," said Secretary Bhattarai. "The document will be an acceptable basis for the government as well as for the donors."