China has become yet another development partner to raise foreign aid quota for the country, as it has pledged to increase grant assistance for Nepal by over 400 per cent in the next fiscal year.
According to report in The Himalayan Times, China is providing a grant of around RMB 800 million (approximately Rs 12.93 billion) in the fiscal 2015-16, as against the assistance of RMB 150 million committed for the current fiscal year. “We will most likely sign an agreement in this regard during our visit to China next week,” said Finance secretary Suman Sharma.
A delegation led by Sharma is leaving for China late in the evening on Monday to attend the meeting of the Inter-governmental Economic and Technical Committee being held after seven years. The meeting, scheduled for Wednesday and Thursday, would discuss issues related to trade, investment and foreign assistance.
“Lately, development partners have started showing keen interest in helping the country achieve development goals, as instalment of an elected government and slew of deals signed in the energy sector have lifted confidence of everyone,” Spokesperson for the Ministry of Finance Krishna Prasad Devkota said.
The country has been receiving huge foreign aid commitments this fiscal. In the first quarter of this fiscal alone, the country registered foreign aid commitment of Rs 84.34 billion — Rs 10.96 billion more than what the country received in whole of the previous fiscal.
In terms of actual flow, the country received foreign cash loans of Rs 1.99 billion and foreign cash grant of Rs 3.34 billion in the three-month period between mid-July and mid-October, show the data of Nepal Rastra Bank. In the same period last fiscal, the country had obtained foreign loan of Rs 1.19 billion and foreign grant of Rs 13.39 billion.
“The flow of foreign grant had suddenly gone up last fiscal, as many development partners suspended aid in the fiscal 2012-13 when political situation was volatile and budget was introduced in installments,” The Himalayan Times reports.
“With the restoration of stability and economic prospects looking up, more development partners are expected to raise their bets on Nepal. This is encouraging for a country like Nepal which is facing huge infrastructure deficit and is making efforts to meet social development targets that are crucial for economic growth,” said Devkota.
While the aid commitment received by the country is gradually going up, the country does not seem to be investing much time in designing projects that could absorb these funds.
The country so far has not been able to identify projects to utilise $1 billion soft loan pledged by India. This is the same in the case of grant assistance being pledged by China.