Foreign aid commitment doubled this fiscal


Foreign aid commitment has surged by 103 per cent so far this fiscal year, as pre-earthquake signs of improvement in economic prospects and business sentiment prompted the country’s development partners to pledge more funds for Nepal.

The country’s development partners — both bilateral and multilateral donors — expressed commitment to pour in Rs 270.60 billion since the current fiscal year began in mid-July 2014, as against Rs 133.44 billion in same period of last fiscal, shows latest report of Ministry of Finance (MoF).

Around 98 per cent of these pledges were made prior to the earthquakes of April and May. These commitments do not include about Rs 440 billion pledged during the International Conference on Nepal’s Reconstruction.

Of the total commitments made by donors so far this fiscal, 50.40 per cent, or Rs 136.38 billion, is in the form of grants and the remaining Rs 134.22 billion in loans.

MoF officials said hopes for return of some sort of political stability since the second Constituent Assembly election, signing of two large-scale hydro project development agreements and power trade deal with India, and improvement in business sentiment encouraged the country’s development partners to pledge more funds for the country.

Of the development partners that pledged the funds, India topped the list with commitments to give away Rs 107.13 billion in grants and loans, show the MoF data.

The amount pledged by India is 39.59 per cent of the total foreign aid commitment received so far by the country.

In November, India formally extended a line of credit of $1 billion (approximately Rs 100 billion) to Nepal. India also pledged to give away Rs 8.78 billion in grant for construction of National Police Academy, Rs 256.70 million in grant to build an irrigation project and Rs 69 million in grant for goitre and other deficiency disorder control programme.

Next in the league table of aid commitment is the European Union (EU). The EU has so far pledged to give away Rs 44.80 billion in grant to boost rural development and job creation, foster quality education and strengthen democratic governance. The amount would be given to the country in between 2014 and 2020.

The third biggest aid commitment was made by the United States Agency for International Development (USAID). The US agency has so far pledged Rs 38.60 billion in grant to strengthen democratic process, improve governance, and enhance maternal and child health and literacy, says the MoF report.

Similarly, the World Bank, a multilateral lending agency, has expressed commitment to give away Rs 25.40 billion in grants and loans to the government, which would be used for implementation of Grid Solar and Energy Efficiency Project, Kabeli Hydroelectric Project, Extended Biogas Project, Higher Education Reform Project and Road Safety Support Project.

Likewise, China has also expressed commitment to extend grant assistance of Rs 12.83 billion for investment in mutually agreed development projects.

Another multilateral lending agency, the Asian Development Bank (ADB), meanwhile, has pledged to give away Rs 12.40 billion so far this fiscal. The fund would be used in establishing women and children service centres, South Asia Sub-regional Economic Cooperation Project and Third Small Town Water Supply and Sanitation Project. The ADB also extended Rs 301 million in the aftermath of the earthquake to support relief works.

Likewise, the UK’s Department for International Development (DfID) has pledged to give away Rs 10.29 billion in grant to the government. The money would be used to support Integrated Programme for Strengthening Security and Justice Project and Accelerating Investment and Infrastructure in Nepal Programme.

Similarly, Germany has pledged to extend a grant of Rs 3.2 billion for various projects.

Among others, OPEC Fund for International Development (OFID) has promised to extend Rs 3.05 billion in soft loan for Community Managed Irrigated Agriculture Sector Project, while Swiss government has committed to extend a grant of Rs 2.76 billion to build bridges, conduct river protection works, improve livelihood in Chitwan and implement small irrigation programme.

Similarly, the United Nation’s International Fund for Agricultural Development (IFAD) has pledged to extend grant assistance of Rs 2.51 billion to implement Adaptation for Smallholders in Hilly Area Project; the Saudi Fund for Development has expressed commitment to give away Rs 2.41 billion for implementation of Rehabilitation and Extension of Danduwa Irrigation Project; and the Norwegian government has pledged to give away Rs 1.83 billion in grant for school sector reform programme.

Likewise, the Kuwait Fund for Arab Economic Development Irrigation has expressed commitment to extend a loan of Rs 1.68 billion; the Finnish government has pledged to provide a grant of Rs 867 million, the Japan International Cooperation Agency has expressed commitment to extend a grant of Rs 522.60 million and Australia has expressed commitment to give away a grant of Rs 313.30 million.