Trend of spending foreign development aid outside government budget system increasing

Kathmandu, Jan 23: The foreign development assistance received by Nepal has started to be increasingly spent outside the national budget system and government treasury.     

Amounts included in the government's annual budget booklet (Red Book) are considered 'on-budget expenditures', while amounts spent without being included in the Red Book are considered 'off-budget expenditures'.     

Similarly, the amounts included in the Red Book are also often spent through some government treasury or the consolidated fund system (on–treasury) while a large amount is spent outside the treasury (off–treasury).     

The Development Cooperation Report–2022/23 released by the Ministry of Finance today shows that 22.5 percent of the total development assistance received by Nepal in that fiscal year was spent outside the budget system.     

According to the report, Nepal received development assistance equivalent to 1.4 billion US dollars in the fiscal year 2022/23, of which, around 1.1 billion, that is approximately 77.5 percent, was off-budget and 309.3 million US dollars, or 22.5 percent, was on-budget.     

The report states that out of the 'on-budget' received, only 40.3 percent, that is, 4.281 million US dollars, was spent from the government treasury.     

The report mentioned that 20.8 percent of the total foreign development aid received by Nepal in that fiscal year was spent off-budget, outside the government's annual budget.     

It is stated that compared to the previous fiscal year, the off-budget ODA has increased by 1.7 percent in the fiscal year 2022/23.     

Similarly, 16.5 percent of the budget was spent in the fiscal year 2019/20 and 15.7 percent in FY 2020/21.     

In the four years up to the fiscal year 2020/21, 'off-budget' expenditure alone has increased by 6.5 percentage point.     

In recent years, development aid funds have also been continuously decreasing. In the fiscal year 2021/22, foreign development aid amounting to 2.4 billion US dollars was committed to Nepal, but the actual received amount was equivalent to 1.4 billion US dollars.     

In the previous year, that is fiscal year 2020/21, Nepal received development aid amounting to 1.70 billion US dollars, while in fiscal year 2019/20, it received development aid of 2 billion US dollars, the highest in the past ten years.     

Looking at this data on the development aid received, it increased by 26.9 percent in the fiscal year 2019/20, while it appears to have continuously decreased in recent years, according to the Report.(RSS)