The Auditor General, Bishnu Bahadur KC, shocked many when he told a Transparency and Development Aid seminar two weeks ago that the Office of the Auditor General of Nepal does not know the exact amount Nepal owes to multilateral lending agencies, and neither is it aware of an amortisation payment schedule. For a country that is overwhelmingly aid dependent with over 65 percent of the development expenditures coming in the form of grants and loan, this statement by the Auditor General is revealing indeed. This was not the first time a public figure, in this case of the stature of the Auditor General, came out publicly to admit that the government doesn't have much of an idea about the total grants and loans the country receives.

The little information that the Nepal government has of total grants and loans it has received, is a concern that others have raised as well. It was as early as 1979 that it came to public light that the administration had little information and control over foreign aid. In their book Planning for People Ludwig Stiller and Ram Prasad Yadav document how when a team of researchers tried to piece together a directory of development projects in Nepal in 1970, they had to go to the United Nations Office and USAID instead of the government to get the data they needed. Things have not changed much in 23 years. Despite the Auditor General's frank admission of ignorance, the World Bank's World Development Report 2001/2002 reported that the total debt stock of Nepal stands at a whopping $2,970 million.

This is reminiscent of a public service announcement on female literacy broadcast on Nepal TV which shows a young girl accompanying her illiterate father to a moneylender. When the father asks for a loan, the moneylender discreetly adds an extra zero to the credited amount. The young girl picks out the error right away and the sly moneylender apologises. The government's situation is not much better than the illiterate villager, since it does not even know how much it owes international sahus.

According to the Auditor General while loan money comes into the audit net, most grant money does not.Loans are incor-porated in the annual budget and the office of the auditor general carries out
the audit.

But this does not seem to necessarily make loans more transparent and accountable than grants. Devendra Raj Panday, board member of the Transparency International and former finance minister, says it is all about effective policymaking and accountable implementation, something multilateral lending agencies have not been able to accomplish.

An approach that seems to be gaining popularity among some donors is the sector strategy. Donors do not develop specific projects in association with government agencies and NGOs, but put their money in a specific sector for the government to decide how the money is to be spent. Such an approach should theoretically reduce duplication and consolidate efforts, but experience has shown it doesn't work either. Compare irrigation and domestic water: one has a sector approach and the other doesn't.

In irrigation, the Department of Irrigation is the exclusive implementing agency. Multilateral lending agencies-both the World Bank and the Asian Development Bank-along with some bilateral donors provide funds to the department which implements projects through its district and regional offices.
There are no other agencies involved irrigation.

The dynamics are quite different in the domestic water arena. While the Asian Development Bank provides sector loans to the Department of Water Supply and Sewerage, some bilateral donors fund activities through NGOs while others work with the District Development Committees. The World Bank, for its part, supports an autonomous board. There are still other international NGOs for whom the overall focus is poverty alleviation and for whom water supply and sanitation is just an entry point rather than the focus of their program. Since 1990, this has led to a change in the nature of discourse on water supply.

Until the late 1980s, the Department used to frame its objectives in terms of the percentage of people receiving \'piped' water, which implied that those who did not receive piped water supplied by the Department did not receive safe water. With other donors entering the field, the flow of bilateral grants and multilateral loans changed this. They envisioned their role in expanding coverage and upgrading the level of services of water supply and sanitation by facilitating access to \'safe' water or \'potable' water. Such \'safe' or \'potable' water could be from pipes and taps, or it could also be from hand-pumps, boreholes or spring water.

This led to a rethink on the role of the department and the perception of its role as providing "reasonable access" to minimum level of services. It also sees itself as a facilitator and not an implementor. In addition, water and sanitation was available at a cost much lower than the department's own.

A plural institutional environment and the existence of multiple actors has made the domestic water terrain more fuzzy, while simultaneously making the role of intervening agencies more focused and service delivery more effective. This indicates that a pluralistic approach with multiple actors is more effective than a "sector" approach with a monolithic implementation.

Foreign aid in Nepal has grown from a trickle to a torrent. With the entry first in the form of a grant from the Ford Foundation for rural development activities in 1951 amounting to $3,000, the grant and loans for the past consecutive years made up over $400 million.

Foreign aid has been the handmaiden of Nepal's development. The planning exercise is possible because of foreign assistance. The first five-year plan that actually got underway in the country from 1956 to 1961 was hurriedly prepared for presentation to a panel of donors in the Colombo Plan meet. Though five-year planning is associated with Soviet style central planning, ironically, in Nepal it was initiated through the help of American advisers.

Foreign aid is for Nepal what colonialism or capitalism are for other countries. It is the connecting link between the nation-state and the international community. It is a way of breaking up with the isolationist past and of relating itself with the wider world.

Foreign aid has indelibly shaped the contours of our nation-state and its peoples. The burgeoning cities of Kathmandu Valley, the expansion of district headquarters, the networks of roads, services and education have largely been the outcomes of foreign aid. Yet, for an enterprise that has indelibly shaped our lives and our society, it is something that is little studied and discussed. For a phenomenon that has spanned several decades and has involved huge investments, there are but a handful of books accessible to the public that shed some light on the aid phenomenon.

Though donors have invested millions on specific projects and programmes, there is very little in the civic domain that informs the wider public whether these have accomplished what they set out to do and at what cost. Transparency has to be more than lip service, making specific documents available to those who are interested is undoubtedly a step in the right direction. Much more needs to be done to explain what donors sought to do, how much it cost, and what the outcome and impact have been.

In order to ensure the transparency and accountability of loans, auditing these is not sufficient. The loans that Nepal receives from lending agencies are called sovereign loans. Which means the parliament representing the sovereign people should know about them. It is necessary for the Finance Minister to inform the parliament of the status of loan, including the amortisation schedule, cleared debts and outstanding dues.