Amid the coronavirus pandemic, the Nepali Government has managed to collect huge amounts in foreign aid from multi- and bi-lateral donors and international private organizations.
The government has mobilized around NPR 360 billion (USD 3.13 billion) in foreign aid in the first 11 months of the current FY 2019/20, up from USD 1.79 billion in FY 2018/19.
Of the total amount of foreign aid, the nation received NPR 299.49 billion through foreign loans and NPR 60.52 billion through foreign grants. The foreign loan makes up to 83% of the total foreign assistance.
Of the total foreign assistance, the Nepali Ministry of Finance (MoF) alone took loans worth NPR 67.22 billion (23% of the total foreign loan), just for debt financing.
The Ministry of Physical Infrastructure and Transport, the second largest recipient, received an external loan of NPR 65.85 billion. Meanwhile, the Ministry of Health and Population (MoHP) received a loan worth NPR 30.95 billion.
Among the foreign donor agencies, the Asian Development Bank (ADB) funded NPR 95.84 billion for Nepal’s development projects. It accounts for 96.5% of the total assistance provided by the international development partner.
The foreign aid makes 33% of Nepal’s revised Federal Budget of NPR 1.38 trillion for the current fiscal.
Even though the foreign aid is mainly mobilized for development projects, the coronavirus pandemic is inciting the Nepali Government to mobilize the loans for unproductive use in the coming fiscal.
The government is reeling under pressure to provide a fiscal stimulus package to the businesses severely affected by the pandemic.
Moreover, the pandemic has led to an increase in budget deficit triggered by the below-target revenue collection.
The Nepali Government has allocated NPR 1.47 trillion budget for FY 2020/21, out of which NPR 172 billion has been earmarked for financing.