Nepal secures international development assistance worth NPR 205.84 bn in first six months of FY

KATHMANDU: In the first six months of the current fiscal year 2081/82 (mid-July to mid-January), Nepal has secured commitments for international development assistance totaling NPR 205.84 billion from donor agencies. This commitment was achieved during the period spanning from Shrawan to Poush of the fiscal year. The majority of this assistance comes in the form of concessional loans, amounting to NPR 151.40 billion , which accounts for 73.40% of the total committed funds.

In contrast, during the same period of the previous fiscal year, Nepal had received commitments worth NPR 59.97 billion , of which NPR 20.27 billion (33.80%) was in grants and NPR 39.70 billion (66.20%) in concessional loans. In the current fiscal year, however, the focus has shifted significantly toward grant-based assistance. Nepal has signed 16 agreements for grants totaling NPR 54.76 billion , reflecting a strong emphasis on non-repayable aid.

Key Donor Countries and Organizations

The countries providing grants to Nepal include:

United Kingdom
Japan
Germany
China
Norway

Additionally, Nepal has secured grants from multilateral organizations such as the European Union (EU) and the Asian Development Bank (ADB) , according to data from the Ministry of Finance.

Sectoral Breakdown of Assistance

The agreements signed during the first six months of the fiscal year prioritize funding for:

Infrastructure Development
Energy
Climate Finance
Social Sectors

For instance:

On Mangsir 26 , Nepal signed four agreements with the Asian Development Bank (ADB). Two of these were grant-based, while the other two involved concessional loans. In total, Nepal has signed seven agreements with the ADB during the first six months of the fiscal year.

In the first month of the fiscal year, Nepal signed three international development assistance agreements :
A grant of NPR 1.40 billion from the UK for infrastructure development.

A loan agreement of NPR 13.43 billion with the World Bank for infrastructure projects.

A grant of NPR 1.20 billion from the World Wildlife Fund (WWF) for climate finance.
Monthly Breakdown of Agreements

The Ministry of Finance’s data shows the following distribution of agreements by month:

Bhadra : 3 agreements
Ashoj : 1 agreement
Kartik : 2 agreements
Mangsir : 7 agreements
Poush : 10 agreements

Commitments by Sector

During the first six months of the fiscal year, development assistance has been allocated across various sectors:

Energy Sector : Commitments for 6 projects totaling NPR 56.41 billion .
Infrastructure Development : Commitments for 5 projects totaling NPR 40.37 billion .
Agriculture Sector : Commitments for 4 projects totaling NPR 37.92 billion .
Budgetary Support : Commitments totaling NPR 33.71 billion .
Climate Finance : Commitments for 4 projects totaling NPR 18.62 billion .
Financial Sector : Commitments for 3 projects totaling NPR 13.62 billion .
Social Sector : Commitments for 2 projects totaling NPR 5.16 billion .

Challenges in Utilization of Development Assistance

Despite securing significant commitments, the expected utilization of development assistance funds has not been fully realized due to several challenges:

Weak Project Management : Issues such as procurement delays and poor planning have hindered the timely implementation of projects.
Fragmentation of Aid : The division of aid into smaller allocations has increased operational costs and created inefficiencies.
Donor Priorities : Development partners often prioritize their own agendas, leading to mismatches in project alignment with national needs.
Off-Budget Assistance : A portion of foreign grants is still managed outside the national budget system through international organizations and NGOs, complicating coordination and accountability.
Technical Assistance Challenges : Monitoring and evaluating technical assistance programs has proven difficult, with overlapping operations and insufficient research.
Exchange Rate Risks : Limited studies and forecasts have made it challenging to manage exchange rate risks associated with foreign loans.