Book Review (Spotlight Weekly)

Foreign Aid Debate

The report looks at various aspects of foreign aid and its contribution to Nepal's development

By A CORRESPONDENT

For the last many decades, the debate has been going on whether foreign aid has made any significant contribution to bring about the changes in Nepalese society. Although no country has done any independent study on the implications of foreign aid, it is very difficult to predict what is the reality based on the reports and studies prepared by groups with support from one or the other international aid agencies.

Interestingly, two divergent foreign aid groups - one that is for it and another that is against it - have already spent a lot of money and resources in deriving different conclusions. In the process of evaluation of utility of foreign aid, people are yet to get the independent and objective arguments.

Supported by ActionAid Nepal, an International Non-governmental Organization, the report prepared by Laxman Acharya reviews the foreign aid along with looking at the Poverty Reduction Strategy Paper propounded by the World Bank.

"Since 1998, the Citizens' Poverty Watch Forum (CPWF) and Action Aid Nepal (AAN) have been jointly producing periodic reports on various aspects of foreign aid in Nepal. The present report is the fourth attempt in this endeavor," writes Dr. Shibesh C. Regmi, country director of AAN and Dr. Binod Bhatta, chairperson of CPWF. " In addition to our regular review of foreign aid, the present report incorporates two new chapters, the Current Macroeconomic Scenario of the Country and the Poverty Reduction Strategy Paper (PRSP). The PRSP, prescribed by the World Bank and accepted by most of the least developed Countries (LDCs) in the world, is meant to herald new era in development cooperation."

The book is divided into four different chapters. The first chapter is on the current macroeconomic scenario that describes poverty trends in Nepal, human poverty, social exclusion, Gross Domestic Product, Inflation, Public Expenditure, Development Expenditure, Social Expenditure, Sources of Financing Development Expenditure and Debt Servicing.

The second chapter is related to a review of foreign aid in Nepal. The author analyses global trends in foreign aid, and its importance. Likewise, the book also delves into various relevant issues like trends in foreign aid, composition of foreign, grant versus loans, bilateral versus multilateral aid, sectoral allocation of foreign aid, analysis of ODA as reported by UNDP, multilateral sources, bilateral sources, INGOs, foreign aid policy, anomalies in foreign aid administration, aid conditionality, burden of foreign aid and impact of foreign aid.

The third chapter is all about the Poverty Reduction Strategy Paper. The author also cites the experiences of PRSP at international level including in Cambodia, Bangladesh, Uganda and Ethiopia.

"In providing a general picture of Nepal's foreign aid situation as well as formulation of the first PRSP, we hope this report will be useful to the government, donors, people's groups and policy makers and contribute to the more effective utilization of foreign aid in the days to come," write Dr Bhatta and Regmi.

Although the book explains the situation of Nepal's foreign aid syndrome criticizing recent foreign aid trends, the way it is written appears somewhat subjective and more focused on pessimism. "Finally, in view of the performance of past periodic plans, achievements in the first year of the tenth plan, the current mentality of politicians and a non-functioning bureaucratic structure, the goals and targets set by the Tenth Plan seems to be ambitious," writes the author in his conclusion. "… Unless it improves dramatically and stable government with strong commitment comes to power, we have no reason to be optimistic."

Despite shortcomings and certain subjective comments regarding the role of foreign aid in Nepal, the book helps to understand some of the aid scenario for Nepal.

A Review of Foreign Aid in Nepal 2003
(With PRSP and Macroeconomic Analysis)
Researched by: Laxman Acharya
Research Advisor: Keshav Prasad Acharya
Published by: Citizens' Poverty Watch Forum And ActionAid Nepal
Price: Rs. 100.00
Pages: 104