Direct payment ‘key problem’ in aid mgmt

- POST REPORT, Kathmandu
Direct payment ‘key problem’ in aid mgmt

Mar 7, 2015-

The government has said increased share of direct payment by donors for contracts is one of the key problems in foreign aid management and implementation.

The Mid-Term Review of the budget released recently by the Finance Ministry has stated the share of direct payment in foreign aid has been increasing. “But the delay in receiving report of such payments has created difficulties in getting real statistics of public expenditure,” states the report.

According to the budget for the current fiscal year, donors are expected to give aid worth Rs 54.42 billion (44 percent) to Nepal through direct payment and commodity grants.

Direct payment means donors paying directly to contractors without going through the national treasury.

Of the expected total foreign aid of Rs 122 billion for the current fiscal year, Rs 68.49 billion is expected to be spent through the government’s treasury.

In the last fiscal year, the share of direct payment and commodity grant was Rs 46.38 billion, while the amount set for the payment through the government treasury was Rs 66.85 billion.

Government officials have been saying non-inclusion of direct payment in the expenditure figure is one of the reasons why capital expenditure is seen lower.

As of March 5, capital expenditure has stood at 20 percent, according to the Financial Comptroller General Office (FCGO). But direct payment is not included in this figure.

Finance Minister Ram Sharam Mahat has also been making claims the expenditure data are misguided in the absence of the spending under direct payment. However, the share of direct payment remains low against the capital budget.

Madhu Marasini, chief at the Finance Ministry’s International Cooperation Coordination Division, said all direct payments are not problematic, and they should be evaluated on case-to-case basis. “The share of direct payment is on-budget, but off-treasury,” said Marasini, suggesting foreign aid under direct payment are recorded in the budget system, but the payments are not made through the government’s treasury.

The report has also pointed out the fact that the utilisation of the foreign aid has remained poor despite rising commitments. The government has expected to spend just 74.91 percent under foreign grant and 52.54 percent under loans committed at the end of the current fiscal year, which suggests poor spending pattern of foreign aid.  Total government expenditure is expected to remain at 92.63 percent.

Published: 08-03-2015 09:18

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