Manang district seems to be the largest receiver of foreign aid, according to a report.
Manang has $665 per capita aid disbursement – highest among the 75 districts – the Development Cooperation Report 2014 launched here today revealed, adding that the Dhanusha and Siraha has $7 per capita aid– the lowest – foreign aid disbursement, whereas the country has received a total of $960 million foreign aid – in the last fiscal year 2012-13 – compared to $1.04 billion a fiscal year ago.
Likewise, the aid disbursement of the fiscal year 2011-12 was also lower than 2010-11, when the country had received $1.08 billion from the development partners.
Central development region had the highest disbursement amounting to $159.52 million followed by mid-western development region with $114.59 million, eastern development region with $111.45 million, western development region with $101.92 million and the far-western development region with $78.13 million, the report added.
"Of the total aid commitment of $1.56 billion in the last fiscal year, Nepal has received only $960 million, also due to low appetite," the third report added. In the fiscal year 2011-12, the country had received some $1.21 billion aid commitment.
Finance Ministry acknowledged the decline in aid disbursement to the weaknesses in the government’s aid absorption capacity. "The disbursement was hit due to delayed budget year after year because of political instability,” said chief of International Economic Cooperation and Coordination Division under Finance Ministry Madhu Marasini.
The low disbursement also revealed the need to overcome structural inefficiencies in the budgetary process.
Off budget aid increasing
Likewise, flow of off-budget foreign aid is increasing in recent years despite the government's effort to channelise it through the budget.
The country received only 64 per cent of foreign aid through budget in the last fiscal year 2012-13, whereas remaining 36 per cent aid was off-budget.
In a fiscal year ago in 2011-12, the government had received 77 per cent of foreign aid through budget. Similarly, around 18 per cent of the on-budget foreign aid in the fiscal year 2012-13 was also disbursed bypassing treasury controller offices, it revealed.
Education sector the largest foreign aid receiver
Of the aid disbursement for a total of 508 projects, education sector remained the largest receiver of foreign aid at $140.72 million – some 15.67 per cent of total disbursement followed by health, local development, road and transport, energy and hydro sectors, that received $128.51 million, $118.28 million, $108.73 million, and $90.73 million, respectively.
Likewise, the World Bank was the largest multilateral donor with a total disbursement of $391 million followed by Asian Development Bank with $273 million. United Kingdom ranked top among bilateral donors with $89.99 million, followed by the US with $67.19, Japan with $65.75 million, and India with $63.81 million, the report added.
The third Development Cooperation Report also reported that except for Global Fund to Fight AIDS, Tuberculosis and Malaria, disbursements from all leading multilateral donors declined in the last fiscal year. "There has been a noticeable decline in disbursements form the World Bank Group and the Asian Development Bank in 2012-13,” the report stated, adding that the World Bank Group's disbursement declined by $38.20 million, while Asian Development Bank's dropped by $92.19 million. But disbursements from bilateral donors like UK, Japan, India, Switzerland and USAID have increased last fiscal year.
Of the total disbursement, some 49 per cent was received from multilateral donors, while 51 per cent was from bilateral donors.
The grants continue to dominate the aid disbursement volume as some 61 per cent ($582.9 million) was grant, 18 per cent ($177 million) was loan and remaining 21 per cent ($199.03 million) was technical assistance, according to the annual report that also revealed that some development partners took back the aid due to the lack of spending capacity of the government.
German development agency took back $2.08 million from assistance extended to the Support to Peace Process, whereas Swiss Development Cooperation (SDC) took back $2.28 disbursed to franchising skill development project.
Likewise, aid is fragmented with a total of 508 projects spanning a portfolio of $959 million, the report stated, adding that each donor on average is found to have been engaged in nine different counterpart ministry and agencies. "Except for a few development partners, many development partners are associated with more than 10 counterpart ministry and agencies."
Foreign aid disbursement
2010-12 – $1.08 billion
2011-12 – $1.04 billion
2012-13 – $960 million