Loans make up 52pc of promised foreign aid

KATHMANDU, JUL 04 -

Donor assistance to Nepal this fiscal year consisted of more loans than grants. According to the Finance Ministry, Nepal received foreign aid commitments worth Rs 78.86 billion as of mid-June this year.

Out of the total promised amount, loans make up 52 percent and grants the rest. This year, grant commitments declined by Rs 12 billion while loan commitments increased by Rs 8 billon as of mid-June.

Meanwhile, there has been a sharp rise in bilateral loans. Bilateral loan pledges jumped three-fold to Rs 21.45 billion compared to last year. Multilateral loan pledges dropped by Rs 6 billion to Rs. 19.42 billion.

Lal Shankar Ghimire, chief of the foreign aid coordination department of the MoF, said that there was no point in comparing the aid commitments of two years as they are part of a process.

“That’s why it may take time for certain loans to materialise which does not necessarily mean that Nepal is receiving less aid,” he said. He added that it should not be argued that the amount of aid should not decrease.

The Asian Development Bank has made the most foreign aid commitments. It has agreed to provide Rs 24.49 billion to the government. Likewise, India and China were the second and third largest possible donors with commitments of Rs 19.75 billion and Rs 8.54 billion respectively. China is providing a loan of Rs 1.7 billion to construct a 220 kV transmission line connecting Upper Trishuli to Kathmandu.

The rest of the pledged aid consists of grants which includes security equipment for the Nepal Police, budgetary support and economic and technical support, among others.

The World Bank and the OPEC Fund have also agreed to provide Rs 3.84 billion and Rs 1.68 billion respectively under multilateral assistance.

The energy sector has been the major attraction for donor agencies, and they are providing Rs 29.50 billion to the government for its development. With an aid commitment of Rs 8.99 billion, the education sector is the second favourite area of interest for donors.

FY    Grants        

2010-11    50.42 billion     

2011-12     37.98 billion   

FY    Bilateral loans    

2010-11    Rs 7.00 billion         

2011-12     Rs 21.45 billion       

FY    Multilateral loans

2010-11    Rs 25.44 billion

2011-12     Rs 19.42 billion

 

Source: http://www.ekantipur.com/2012/07/04/business/loans-make-up-52pc-of-promised-foreign-aid/356583/