Govt failed to get Rs 5.5b reimbursed from donors

The government has failed to secure reimbursement of expenditure worth Rs 5.5 billion from different donors as it did not mention the contribution of external assistance in the overall cost of some ongoing projects in the budget over the past few years.
“We won´t be getting reimbursement amounting to Rs 5.5 billion from different donor agencies as the finance ministry failed to clarify the exact contribution of donors in the projects that are being implemented for the past few years,” Narayan Niroula, under secretary at the Financial Comptroller General´s Office (FCGO), said.
According to Niroula, the situation emanated as the government drafted budget for projects in the fiscal plans of different years in the past without matching it with the agreements that it had inked with the donors. “Most of the projects in which the government is losing the reimbursement are in education and health sectors,” he added.
The government had prepared budget for some of the projects in those sectors without matching the commitment of the donors for the fund to implement them. “It´s a cumulative figure inherited over the past few years," Niroula said.
According to Niroula, the government is losing Rs 500 million as it failed to request concerned donor for reimbursement in time.
Most of the donors from whom the government failed to secure reimbursement are in the ´pool fund´ of the World Bank, he said.
Meanwhile, Public Expenditure and Financial Accountability (PEFA) Secretariat under the FCGO has alleged that the government was performing poorly in management of public expenditure.
"The government is losing fund from donors due to its inefficient management of income and expenditure as per the agreement with donors,” Mahesh Prasad Dahal, joint financial comptroller general, said at an interaction organized by Society of Economic Journalists-Nepal (SEJON) on Sunday.
“It is high time the government work seriously toward ensuring the effective handling of external assistance."

Donors to help enhance pvt sector capacity

Amid slowing industrial activity in the country, donor agencies have expressed readiness to help enhance the capacity of Nepali private sector to increase contribution of industrial sector to Gross Domestic Product (GDP).
Japan International Cooperation Agency (JICA), the Asian Development Bank (ADB) and International Finance Corporation (IFC), among others, have separately initiated homework to chart out the modalities of support to strengthen the Nepali business community.
Donor agencies are interested in extending support for formulation of Private Sector Development Policy (PSDP), establishing private sector development forum and strengthening relations between the private sector and other stakeholders.
The government is working to bring out a draft of PSDP with support from IFC after almost two decades after the country embraced open market economy.
According to Anil Kumar Thakur, joint secretary at the Ministry of Industry (MoI), the government is closely working with representatives of the Confederation of Nepali Industries (CNI) and Federation of Nepalese Chambers of Commerce and Industry (FNCCI) to chalk out PSDP.
Keshav Acharya, former senior economic advisor for Ministry of Finance (MoF), said it was encouraging that the donors are interested in enhancing the capacity of Nepali private sector at a time when the industrial output is slowing.
Meanwhile, ADB, a regional development agency in the Asia-Pacific, has also started ground work for identifying the absorption capacity of the Nepali private sector.
Efforts aimed at enhancing the capacity of the country´s private sector are being taken at a time when the contribution of the manufacturing sector to the GDP has been decreasing constantly. According to statistics compiled at the MoF, the contribution of manufacturing sector to the GDP has just been 6.2 percent in the fiscal year 2011/12.
“The government should be able to take optimum benefit from donors´ efforts,” said an official at MoI.
JICA is working to establish a private sector development forum. Embassy of Japan in Kathmandu has initiated talks with FNCCI, the apex body of the private sector, aiming to identify possible ways of cooperation.
“Embassy of Japan has expressed interest to facilitate private sector by establishing a bridge between Nepali and Japanese private sector through JICA,” said the FNCCI official. He added that the private sectors of the two countries would have extensive discussions and communications once the proposed forum is established.
Moreover, the Japanese government has also announced that it would provide assistance to the Nepali private sector through its official development assistance (ODA).
At a recent meeting with senior representatives of the Nepali private sector, ambassador of Japan to Nepal Kunio Takahashi had indicated that Japan would initiate support especially to enhance private sector capacity through ODA.

DONORS NOT ABOVE ACCOUNTABILITY AND TRANSPARENCY

The government is bringing new provision to make development partners accountable

This piece was first published in the The Reporter Weekly.

In a belated exercise, the Ministry of Finance is planning to make it mandatory for the Development partners to submit details of actual aid and their disbursement to the government quarterly.

This provision is being included in the ‘Action Plan for improving portfolio performance-2012’ prepared by the Ministry which is going to be put before the Council of Ministers for adoption shortly, official sources said.

Upon approval, the development partners shall have to submit all details—actual aid amount their disbursement –every three month under the theme of ‘mutual accountability’, a new theme added to the existing themes. The government move follows widely raised complaints about the lack of transparency in aid disbursement. ‘The mutual accountability’ is an obligation under the Paris Declaration 2005 with the objective of making the aid more effective in the Least Developed Countries (LDCs). "This is the local initiation to implement the Paris Declaration- 2005,"  Kailash Raj Pokharel, Under Secretary in the MOF ,  who is also the coordinator of Nepal Portfolio Performance Report and Action Plan formulation team, said.

Official say, the latest move brings the development partners in Nepal  --often critical of the Government and  its machineries for the delay in implementing the projects –into the accountability net.  Nepal receives almost one third of its f total budget and more than 70 per cent of total development expenditure every year from the donors.

As per the new arrangement, the development partners will have to submit their actual aid vs. disbursement amount in every three months and also  the mid-term budget review. "This norm will help us to fasten the development projects which are being delayed by the slow disbursement of budget from development partners," Under-secretary Pokharel said.

Other four themes of the action plan include  Public Financial Management (PFM), Public Procurement, Improving Human Resources Management and Managing for Development Results (MfDR). ‘With the new arrangement, we hope to have an environment of mutual accountability and faster pace of development’, he said.

Under the new scheme, the government will be asking development partners  to submit their planned disbursements for next three fiscal years and the actual disbursement in every three months. "The huge gap between planned and actual disbursement should not exceed 20 per cent by the end of this fiscal year onward," the draft of the action plan says.

The new plan also aims at addressing the issue of lesser predictability of the aid. “It should be more predictable--which can be done only by reducing the gap between planned and actual disbursements." Under-secretary Pokharel said, adding that this action plan is going to bring all the development partners in a national record.

Development partners, mostly some bilateral ones, keep complaining about the government's weak mechanism but do not submit their periodic reports that show their level of transparency. Only 45 per cent of total amount of  money development partners bring in Nepal is spent through the national budget system, and the remaining 55 per cent is spent under their discretion, something that lacks transparency.