Kathmandu, August 4

Fund allocation made by development partners for off-budget programmes jumped by 24.67 per cent in current fiscal, indicating more foreign financial resources would not find their way into the government’s treasury before they are spent by bilateral and multilateral donor agencies.

Bilateral and multilateral donor agencies have pledged technical and other assistance of around Rs 25.82 billion for this fiscal, as against Rs 20.71 billion in last fiscal, shows latest report of Ministry of Finance (MoF).

This amount will be used by donors themselves for purposes like hiring consultants to prepare different reports, extending training to build capacity of human resources and advocacy. In other words, this amount will be used by the fund provider directly during project implementation in the country. So, it will not be channelled through the government treasury.

This amount, however, does not include funds pledged by international non-governmental organisations — many of which also prefer to spend funds on their own, rather than through the government channel.

The biggest recipient of technical and other assistance in the current fiscal is Ministry of Education (MoE).

Various donors have pledged Rs 7.36 billion for MoE to fund various programmes, shows the MoF report. Some of these programmes include $50.17-million ‘Australian Awards’ funded by Australian government and $7.42-million ‘Employment Fund Phase I’ funded by Swiss government.

Next in the league table of biggest recipients of technical and other assistance is the Ministry of Federal Affairs and Local Development (MoFALD). Donors have pledged a fund of Rs 7.16 billion for this ministry.

Some of the programmes that will be implemented through MoFALD are: $11.95-million ‘Strengthening Political Parties and Electoral and Legislative Processes’ and $8.36-million ‘Sajhedari’, which aims to improve local governance by assisting communities. Both the projects are funded by the US government.

Ministry of Health and Population (MoHP) is third largest recipient of technical and other assistance. A fund of Rs 1.84 billion has been pledged for MoHP, which will be used to implement 17 different programmes, of which $9.2 million will go towards ‘Suaahara (Good Nutrition)’ programme funded by US government.

Although the government has long been trying to convince development partners to channel all funds through its coffers, it has not been able to do so. Some development partners that prefer to provide assistance through off-budget mechanism are United States Agency for International Development, Germany, European Union and Korea, as per MoF’s Development Cooperation Report 2013-14.

The technical and other assistance pledged for this fiscal is equivalent to 12.54 per cent of the total foreign grants and loans that the government plans to mobilise from donor agencies to meet its annual expenditure.

The government is planning to meet its expenditure target of this fiscal by mobilising Rs 110.93 billion in grants and another Rs 94.96 billion in loans from development partners.

The increasing size of foreign grants and loans in government’s budget indicates that the country is becoming more reliant on foreign resources to fund its needs. This fiscal, for instance, foreign grants and loans made a contribution of 25.12 per cent to the annual budget, as against 19.88 per cent in the last fiscal year.

The government is relying more on foreign resources to cover various expenses of this fiscal because of likelihood of fall in the state’s revenue due to the earthquakes of April and May. The tax and non-tax revenue collection target for this fiscal stands at Rs 475.01 billion, which is not even sufficient to cover projected recurrent expenditure of Rs 484.27 billion.