Record high foreign aid received in last fiscal year

Kathmandu, December 31

The country received record high foreign aid in the last fiscal 2016-17 worth $1,394.6 million, which is an increase of 30 per cent as compared to the previous fiscal, according to the Development Cooperation Report unveiled by the Ministry of Finance today.

Annual foreign aid disbursement volume has been between $960 million and $1,100 million over the previous six years. Foreign aid disbursement significantly increased in the last fiscal as the country received the pledged amount for the post-earthquake reconstruction drive.

Of the total amount of foreign aid disbursed, grants comprised a significant portion which was worth $582.39 million (41.76 per cent), loans at $548.85 million or 39.36 per cent, and technical assistance was worth $263.36 million or 18.88 per cent, as per the report.

Unveiling the report, Finance Minister Gyanendra Bahadur Karki, said that the foreign assistance realisation has grown significantly along with the completion of the foreign aid funded projects. On the other hand, contribution of foreign aid in budget financing is gradually picking up in recent years. As the country has adopted the federal system of governance, dependency on foreign aid is expected to rise as the government’s liability in setting up provincial and local level institutions will be high, according to officials.

As per the MoF report, 73 per cent or $1012.6 million was channelled through the government budget and $382 million or 27 per cent was spent out of the budget. Off-budget expenditure means those programmes that are run by the development partners and not incorporated in the national budget and such programmes might not be aligned with the government’s priority programmes.

Off-budget expenditure dropped significantly to 27 per cent of the total foreign aid disbursed in 2016-17 compared to 37 per cent of fiscal 2015-16. However, in terms of amount, it increased to $382 million compared to $357.3 million of the previous fiscal.

The government spent 65 per cent of the disbursed foreign aid through its own treasury and the remaining 35 per cent of the disbursed amount was spent directly by the development partners themselves.

According to the report, the World Bank Group disbursed the highest amount among multilateral development partners which stood at $345.97 million, followed by Asian Development Bank at $253.9 million. The UN country team disbursed $120.73 million and the European Union provided $83.89 million.

Similarly, USAID disbursed the highest amount in the last fiscal among bilateral donors which was worth $134.06 million followed by United Kingdom at $128.31 million. Japan including Japan International Cooperation Agency disbursed $77.65 million, India provided $59.26 million and China disbursed $41.24 million.

Of the total foreign aid disbursed in the last fiscal, 51.4 per cent or $716.78 million was spent on national level programmes and the remaining for district level programmes.