Nepal mobilizes foreign assistance of Rs 360 billion in 11 months

June 23, 2020

MyRepublic, June 23, 2020

KATHMANDU: Nepal mobilized around Rs 360 billion (around $ 3.13 billion) in foreign aid in the first 11 months of the current fiscal year. Of the total foreign aid, a notable portion was received by the Ministry of Finance (MoF) for repayment of interest and loans.

Out of the total amount of foreign aid received as of May end, the country received Rs 299.49 billion in loan from foreign donors, according to the MoF records. It makes 83 percent of the total foreign assistance. Foreign grants cover only Rs 60.52 billion. Of the total foreign aid, the finance ministry alone took a loan of Rs 67.22 billion -  23 percent of the total foreign loan - just for debt financing.

The amount of foreign aid makes 33 percent of the government’s revised budget of Rs 1.38 trillion for this fiscal year. The government is now under pressure to provide a fiscal stimulus package mainly to the business sectors devastated by Covid-19.  

The government has earmarked an expense of Rs 1.47 trillion for 2020/21, out of which Rs 172 billion has been allocated for financing. While the foreign aid is supposed to contribute mainly to development projects, an increase in budget deficit triggered by the below-target revenue collection at present is likely to make the government mobilize more external loans for unproductive use in the next fiscal year.

Foreign aid is a key funding source for Nepal’s development efforts. In the last fiscal, official development assistance (ODA) made up 24 percent of the national budget, according to the Development Cooperation Report 2018-19. In the year, Nepal received foreign aid totalling $1.79 billion from multilateral and bilateral donors and international non-governmental organizations.

During the review period, the Ministry of Physical Infrastructure and Transport got an external loan of Rs 65.85 billion - the second largest recipient. Similarly, the Ministry of Health and Population received a loan worth Rs 30.95 billion.

Of the donor agencies, Asian Development Bank (ADB) funded Rs 95.84 billion into Nepal’s development projects, the largest of all. ADB’s loan accounts for 96.5% of the total assistance provided by the international development partner. 



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