The Ministry of Finance organised a discussion programme in the capital on Sunday, ahead

of the government’s consultative meeting with donor agencies and countries. The meeting is

taking place at a time when the government urgently needs several billions of rupees to meet its ballooning expenses. The finance ministry has prepared a 37-page draft of ‘Foreign Aid Policy-2008’, which represents a revision of the foreign aid policy of 2002. It sets out guiding principles that stress the broad goals of poverty reduction, the building of a ‘prosperous, modern and just Nepal’, ‘demand-driven rather than donor-imposed’ foreign aid forming a part of the overall policy of mobilising local resources for development, greater transparency, accountability, predictability with respect to foreign aid, as well as attention to the tenets of the Paris Declaration on aid effectiveness, and ‘last but not the least’ the longer-term goal of achieving self-reliance in resource mobilisation.

But these are not new things. In fact, Nepal’s foreign aid policy has always emphasised, on

paper, higher goals and objectives, as well as the temporary nature of foreign aid ever since the country started its experimentation in planned economic development more than five decades ago. But how many of those goals and objectives have been achieved — and, to what extent — this has become a moot point. The stated thrusts on foreign aid were often forgotten when negotiating, signing and implementing most foreign-aided programmes and projects. That is why many of the donor-funded schemes and the terms and conditions attached to them have not answered the Nepali purpose. Much of the aid has found its way back to where it came from — for instance, in the form of consultants’ fees, salaries and perks. Expensive, and often unnecessary, seminars, travels and other unproductive things have often received priority. Of aid effectiveness, donors themselves have at times made known their not-so-rosy view.

Such views might sound cynical to some. But in their evaluation of foreign aid and its utilisation in Nepal so far, most experts hold much in common and share an unflattering assessment. Much of the poor performance on foreign aid front has been due to the near-impunity that government officials and leaders have enjoyed for their deficient financial integrity, for the conflicts of interest they are engaged in, for the unwise decisions they make causing a huge loss to the state, though in possession of knowledge of what are they doing, often influenced by unwholesome considerations. Unless this is well taken care of, any talk of using foreign aid effectively and for the right programmes and projects will be unrealistic. Most of the important donor agencies and countries, besides tending to base their aid decisions often on the domestic political factors, have also contributed to most of the existing ills. If they could exercise their considerable influence effectively and constructively to ensure that aid is properly utilised and corruption is checked, their aid would serve the Nepali people much better.