22-28 May 2015 #759

Where is the money?

Basanta Basnet in Kantipur, 15 May

“It is true that the government has not rightfully recognised efforts made by NGOs, but the bigger truth is: the NGOs do not seem interested to work with the government.”

That is a quote from an article by eminent sociologist Chaitanya Mishra over a decade ago during the multi-party democracy era. Similar sentiments have been expressed about our over-dependence on foreign aid, and it being channeled through non-state actors.

Now that Nepal is experimenting with republicanism, the nature of foreign assistance has still not changed at all. The government has often criticised how foreign assistance is channeled and spent in Nepal. And in the aftermath of the 25 April earthquake, the government is dissatisfied with the way foreign assistance is being used.

Interestingly, Finance Minister Ram Sharan Mahat, who is perceived as a donor-friendly politician, also appears to be unhappy with the donors this time. “They just brought goods, not cash,” says Mahat. “We need financial assistance for reconstruction and rehabilitation, which we did not get.”

In a meeting between the government and donors last week, he said, “Foreign assistance meant for reconstruction and rehabilitation should not be used for overheads and administrative costs, it should go to earthquake-affected people.”

Mahat is also miffed at donors for ‘talking aloud about their support’ but not depositing cash in the Prime Minister Disaster Relief Fund. “Apart from Asian Development Bank’s Rs 300 million, we’ve not received any cash,” he said.

While the government complains about donors not coordinating with government agencies, donors say they are hassled and forced to jump through hoops. As a result of distrust between the government and donors, much of the foreign assistance pledged by various countries has not reached the Prime Minister Disaster Relief Fund.

Denmark and Australia had pledged Rs 600 and Rs 800 million respectively but that money has not yet been deposited in the PM Fund. Both reportedly want to spend the pledged money on their own terms, and their reasoning is that there is no accountability at the local level. But the government says two-third of foreign assistance will be wasted in the administrative cost of donor agencies if they are allowed to spend it. 

Former Prime Minister Baburam Bhattarai seconds Mahat’s argument that foreign assistance must be spent by the government, but believes that donors must be assured that their money will not be misused. “Foreigners are running parallel activities because our state is weak,” he says. “Not even 15-20 per cent of the foreign assistance has reached the earthquake-affected people.”

Pitambar Sharma, former vice-chair of the National Planning Commission (NPC), says donors would not have done what they are now doing if the government was strong. “Look at China, INGOs cannot work there without coordinating with the government, without accepting all preconditions put forth by the Chinese government.” He says Nepal must emulate China but for that the state needs to be much stronger than it is now.

Economist Keshav Acharya says the government might be weak but that should not be an excuse for donors to do whatever they want. “See what’s happening in Haiti, donors have spent more than $13 billion, with not much to show for it.”

Read also:

The four-fold path, Pradyumna Rana

Real story on PM relief fund

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