Nepali Times
"Local groups can deliver service"

The US dollar is depreciating, this must be good news for our loan repayment?
Yes it is. But it will be an advantage only if we can pay now and that depends on the revenue situation. It would certainly be a good time to pay back our loans. Because we have ammortisation schedules for loan repayment we can't pay early but we can always talk to the creditors and change the timing schedule or currency.

Shouldn't our reserves be determined by currency values in the international market?
That could make some difference and I am sure that the Nepal Rastra Bank and the Financial Controller's Office are looking into the matter.

Aid has gone up, but due to the insurgency development spending has gone down. How does it work?
This has been our concern as well. But donors have been very supportive. We know we have not been able to spend what we should and we have been in touch with donors and line ministries to develop a new mechanism so spending can be increased.

The government had stated that such mechanism would include local users groups and communities to implement programs. The insurgents don't mind services that reach the grassroots. When we use the community groups for projects on health, drinking water and public infrastructure, they are not getting affected.

How much have foreign aided projects been hampered because of the diversion of the budget to security expenses?
It is very difficult to say. But one thing that we can say for sure is that the foreign assistance we have been receiving are all tied to projects and they can only be spent on programs they are meant for. We have not diverted money for security purposes.

What about assistance given for budgetary support, can't that be diverted for security expenses?
I don't agree. Even if the assistance is for budgetary support, it is meant for development programs and that is where we can spend it. There could be some kind of tradeoff because if there are any domestic savings, which we could use for development programs, they may go for other recurrent expenditure.

If that is the case, how do you find money for the ever increasing security expenses?
That is from our domestic savings. We can't use donor money for security at all.

So, if we had so much domestic savings why were we turning to donors for foreign assistance for development?
The problem is we are not in a comfortable position even now in terms of increasing security expenses. It is difficult for us. I am not saying we have a lot of domestic savings and we can spend it all on security. We have a very tight budget but we are managing right now.

An increasing number of donors are either suspending their projects or pulling out.
I wouldn't say they are pulling out. Some have suspended project activities for the time being. They are trying to investigate incidents that led to the suspension.

Donors are keen on a review of last year's Nepal Development Forum to look at implementation.
It's not really a review meeting. We hold meetings with donors every alternate month and the next one is due at the end of the month. As far as the NDF review is concerned, we hold the meeting every two years. That will happen in due course.

But donors are worried that the Auditor General's report hasn't been made public for three years and want that meeting right away.
Regarding the AG's report, we are also very concerned. Every year we make the Immediate Action Plan to execute certain plans and programs immediately and the National Planning Commission and the Ministry of Finance jointly monitor it. One of the key actions under the IAP this year, is to make the AG's report public.

In your interaction with donors, how do you find their current mindset?
Their general concern is how to implement development programs in the present security situation. They are concerned about peace talks.

(11 JAN 2013 - 17 JAN 2013)