Foreign aid assistance decreases by Rs 77 billion
Nepal is currently facing significant challenges in securing resources for its development projects, with a notable decrease in international aid from its development partners. This decline in foreign aid, as reported by the Ministry of Finance (MoF), has led to difficulties in meeting revenue collection targets and has impacted various development initiatives due to resource constraints.
The half-yearly assessment report released by the Ministry of Finance indicates a substantial decrease in international development aid commitments during the first six months of the fiscal year 2023/24 compared to the previous year. Specifically, there has been a decrease of Rs 77.14 billion in aid commitments during this period.
In the fiscal year 2022/23, Rs 137.12 billion was pledged as international development aid during the first half-yearly assessment. However, in the corresponding period of the current fiscal year, only Rs 59.18 billion has been committed, reflecting a significant decrease of 56.26 percent compared to the same period last year. This decline marks the lowest foreign aid commitment received in the past five years.
The decline in foreign aid may be attributed to reduced government spending capacity and sluggish project implementation. Despite the government’s utilization of foreign aid in various sectors such as roads, irrigation, electricity, and drinking water, achieving the target of mobilizing Rs 262.69 billion through international development assistance seems increasingly unlikely.
The ministry has noted a slowdown in the implementation of foreign-funded projects, citing poor management and laxity among construction professionals as contributing factors. Additionally, delays in utilizing available foreign aid and incomplete project preparations have hindered the mobilization of aid, prolonging project implementation timelines even after signing financial agreements.
While negotiations regarding the acceptance of foreign aid and concessional loans are ongoing, challenges persist in obtaining additional aid. The government continues to engage with bilateral and multilateral development partners to secure grant aid and subsidized loans for various sectors including health, education, transportation, environment, agriculture, and economic development.
However, efforts to streamline the contracting of development assistance within the budget system are underway, aiming to improve project preparation processes and expedite implementation timelines. Despite these challenges, Nepal remains committed to leveraging international aid to support its development priorities and address critical needs across various sectors.
