Share of on-budget foreign support gradually growing

Kathmandu, Aug. 19

The foreign aid is increasingly coming as budgetary support, according to the Ministry of Finance (MoF).

Chief of the International Economic Cooperation Coordination Division at the Ministry Shreekrishna Nepal said that off-budget foreign support had decreased and on-budget support had increased in the last fiscal year 2019/20.

The government has adopted the policy of accepting the bilateral and multilateral economic cooperation through the budgetary programmes.

Last year, the country received Rs. 89 billion foreign aid, about Rs. 55 billion higher than the previous year. In FY 2018/19, the total inflow of foreign support was Rs. 34 billion while it was Rs. 21 billion the year before.

Likewise, the technical cooperation went down to US$ 210 million in the last fiscal from $263 a year earlier, said Nepal while speaking in a webinar organised by the Society of Economic Journalists Nepal.

"The government has been trying to bring all types of cooperation under the fiscal system which has resulted in increasing on-budget cooperation," he said. "Despite that, technical grant is still mobilised out of the budgetary system. We need it due to skill capacity gap in various sectors."

Similarly, he said that the country's public debt had reached Rs. Rs. 1,346 billion – Rs. 613 billion domestic and Rs. 733 foreign loan.

The public debt amounted to about 30 per cent to the Gross Domestic Product in previous years but it has now gone up to 36 per cent due to the unexpected impact of coronavirus pandemic on the economy.

Meanwhile, the government has repaid the loan of about Rs. 83 billion last year. The amount is about 11 per cent of the revenue collected and 30 per cent of the Foreign Direct Investment.

According to Nepal, there was no set standard about the limit of the public debt a country should accept, rather its appropriate use should be the focus. The country also needs to address the challenges in the implementation of various development aids. "We have to prioritise the expenditure and focus on the projects that support in economic rehabilitation," he said.

Meanwhile, the government has achieved about 6 per cent of the target in revenue collection till 18 August, 2 days after the end of the first month of the current fiscal year.

The Financial Comptroller General Office reported that the total revenue collection till Tuesday stood at Rs. 61.37 billion. Likewise, total expenditure till yesterday amounted to Rs. 69.5 billion, 6.48 per cent of the total budget – Rs. 1,474.6 billion. However, the capital expenditure is just 0.04 per cent.

Published in The Rising Nepal daily on 20 August 2020.