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Development Cooperation Report Fiscal Year 2011-2012

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Development Cooperation Report Fiscal Year 2011-2012 DEVELOPMENT COOPERATION REPORT FISCAL YEAR 2011-2012 Government of Nepal Ministry Of Finance International Economic Cooperation Coordination Division Singhdurbar, Kathmandu March 2013 DEVELOPMENT COOPERATION REPORT FISCAL YEAR 2011-2012 Government of Nepal Ministry Of Finance International Economic Cooperation Coordination Division (IECCD) Singhdurbar, Kathmandu March 2013 International Economic Cooperation Coordination Division (IECCD) of the Ministry of Finance (MoF) encourages printing or copying information exclusively for personal and non commercial use with proper acknowledgement. Users are restricted from reselling, redistributing or creating derivative works for commercial purposes without the written consent of IECCD/MOF. i iii v vii Table of Contents LIST OF ABBREVIATIONS ii KEY DEFINITIONS iv EXECUTIVE SUMMARY vi 1. AID CONTEXT IN NEPAL 1 1.1 Aid Management in Nepal 1 1.2 Government’s Initiatives for Aid Effectiveness 3 1.3 Aid Transparency and Mutual Accountability 4 1.4 IECCD Newsletter 5 2. OVERVIEW OF THE STRUCTURE OF FOREIGN AID IN NEPAL 6 2.1 Volume of Foreign Aid Disbursements for Fiscal Year 2011-12 6 2.2 Sector-wise Allocation of Foreign Aid 7 2.3 Types of Aid Disbursement 8 2.4 Analysis of Geographic Distribution of Aid Disbursement 9 2.5 Foreign Aid Commitments in Fiscal Year 2011-12 11 3. FOREIGN AID FLOWS AND AID EFFECTIVENESS 12 3.1 Analysis of Aid Modalities 12 3.2 Aid On Budget and Aid On Treasury 12 3.3 Alignment on National Development Plan 13 3.4 Aid Fragmentation Analysis 14 4. SECTOR PROFILE FOR TOP 10 RECIPIENTS 23 4.1 Education Sector Profi le 23 4.2 Local Development Sector Profi le 25 4.3 Road Transportation Sector Profi le 26 4.4 Electricity Sector Profi le 27 4.5 Health Sector Profi le 28 4.6 Agriculture Sector Profi le 30 4.7 Peace and Reconstruction Sector Profi le 32 4.8 Economic Reform Sector Profi le 33 4.9 Others - Social Sector Profi le 34 4.10 Drinking Water Sector Profi le 35 Annex 1 - Donor-wise Comparative Disbursement for Fiscal Year 2010-11 and 2011-12 36 Annex 2 - Sector-wise Comparative Disbursement for Fiscal Year 2010-11 and 2011-12 41 Annex 3 - Per Capita Disbursement per District for Fiscal Year 2011-12 (Nationwide projects excluded) 42 Annex 4 - Project-wise Commitments and Disbursement for Fiscal Year 2011-12 44 i LIST OF ABBREVIATIONS ADB Asian Development Bank AMP Aid Management Platform AusAid Australian Government Overseas Aid Program BMIS Budget Management Information System CIDA Canadian International Development Agency DPs Development Partners DFID Department for International Development EDCF Economic Development Cooperation Fund EU European Union FMIS Financial Management Information System FY Fiscal Year GDP Gross Domestic Product GAVI Global Alliance for Vaccines and Immunisation GFATM Global Fund to Fight AIDS, Tuberculosis and Malaria GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit IDA International Development Association IECCD International Economic Cooperation Coordination Division IFAD International Fund for Agriculture Development JFA Joint Financing Arrangement JICA Japan International Cooperation Agency KfW Kreditanstalt für Wiederaufbau KFAED Kuwait Fund for Arab Economic Development LDM Local Donors Meeting MDG Millennium Development Goals MOF Ministry of Finance NDF Nordic Development Fund NLSS Nepal Living Standards Survey NPPR Nepal Portfolio Performance Review ODA Offi cial Development Assistance OFID OPEC Fund for International Development OPEC Organization of Petroleum Exporting Countries PBA Program Based Approach PFM Public Financial Management ii SWAP Sector Wide Approach TA Technical Assistance UN United Nations UNDP United Nations Development Programme UNHCR United Nations Offi ce of the High Commissioner for Refugees UNICEF United Nations Children Fund UNOHCHR United Nation Offi ce of High Commissioner for Human Rights UNPF United Nations Peace Fund USAID U.S. Agency For International Development VDC Village Development Committee WB World Bank WFP World Food Programme iii KEY DEFINITIONS Budget • On Budget: Amounts which are refl ected in the Red Book • Off Budget: Amounts which are not refl ected in the Red Book • Off Treasury: Amounts not channeled through the government treasury system • On Treasury: Amounts channeled through the government treasury system Modality of Assistance • Program Support: Programme-based approaches share the following features: (i) Leadership by the host country or organization; (ii) A single comprehensive programme and budget framework; (iii) A formalized process for donor co-ordination and harmonization of donor procedures for reporting, budgeting, fi nancial management and procurement; (iv) Efforts to increase the use of local systems for programme design and implementation, fi nancial management, monitoring and evaluation. • Project Support: Development projects which operate on a stand-alone basis, or which are coordinated to a certain extent but do not meet the criteria for a program-based approach or SWAP. • SWAP: Specifi c type of PBA covering a whole sector (e.g. Education and Health).This refers to the common approach of implementing a programme led by the government under the support of various development partners within a common and joint funding arrangement. • Humanitarian Assistance: Designed to save lives, alleviate suffering and maintain and protect human dignity during and in the aftermath of emergencies (e.g. Food Assistance to Refugees). Type of Aid/Funding • Grant: A grant is the provision of funds by a donor that does not oblige the recipient countries to repay the amount. Transfers made in cash, goods or services for which no repayment is required. iv • Loan: Transfers for which repayment is required. Loan must be repaid according to conditions established at the time of the loan agreement or as subsequently agreed upon. To qualify as ODA, loans must: (a) be undertaken by the offi cial sector; (b) have the promotion of economic development and welfare as the main objective; (c) have concessional fi nancial terms [having a grant element of at least 25 percent]. • Technical Assistance: Refers to assistance provided by development partners to Nepal for the purpose of capacity development of individuals, organizations, and institutions of Nepal, including consultancy services and the cost of associated equipment. Mode of Payment • Cash: Money given in the form of cash. • Commodity: In-kind grant given in the form of a physical item (e.g. food aid). • Reimbursable: Money spent against the project by the government which is reimbursed by the donor. • Direct Payment: Payment from the donor, given directly to the providers of services/goods. Disbursements Disbursements represent the international transfer of fi nancial resources to the recipient country which could be actual or planned. • Actual Disbursements: Funding which has been transferred by the donor to the government’s treasury. For donor-implemented projects, this would be payments made to the executing/ implementing agency. This information is provided by development partners trimesterly through Nepal’s Aid Management Platform (AMP). • Planned Disbursements: Disbursements to be made during the life of the project. A 3 year forward schedule should be entered on signature of the agreement, and then updated annually 3 months before the budget is released. Donor’s Type The origin of development assistance funds; could be multilateral or bilateral. • Multilateral: Institution or agency with multiple participating nations or parties providing development assistance (e.g. World Bank, Asian Development Bank etc). • Bilateral: Member states of the United Nations that provide development assistance directly to the recipient country (e.g. India, China, UK, USAID etc.). It may also refer to country to country development assistance. Commitment A commitment is a fi rm obligation expressed in an agreement to provide assistance of a specifi ed amount for specifi c purposes under agreed fi nancial terms and conditions for the benefi t of the recipient country. v EXECUTIVE SUMMARY 1. A total of new commitment of US$ 1.21 billion was registered in the Aid Management Platform in fi scal year 2011-12. Most of the new commitments were signed with the Government of Nepal through the Ministry of Finance while the remaining commitments were associated with off budget and/or technical assistance projects. 2. In 2011-12, total ODA disbursement was US$ 1.04 billion, of which approximately 57 percent came from multilateral donors, while 43 percent came from bilateral donors. 3. The top fi ve multilateral development partners in fi scal year 2011-12 were the World Bank Group (US$ 269.60 million), Asian Development Bank (US$ 193.40 million), the United Nations Country Team (108.17 million), the European Union (US$ 43.97 million) and the Global Fund to Fight AIDS, Tuberculosis and Malaria (US$ 15.09 million). The World Bank, Asian Development Bank and the UN Country Team contributed approximately 55 percent of total disbursements. 4. The top fi ve bilateral donors for the same fi scal year were the United Kingdom (US$ 84.24 million), India (US$ 50.62 million), Japan (US$ 44.09 million), Norway (US$ 41.68 million) and Germany (US$ 38.83 million). China also provides signifi cant aid to Nepal but it is currently not well-reported in the AMP. 5. The education sector was the top sector receiving foreign aid, followed by local development, road, electricity, and health. The education sector received US$ 229.04 million (21.91%), local development US$ 153.51 million (14.63%), road transport US$ 116.73 million (11.17%), electricity US$ 106.82 million (10.22%) and health US$ 85.07 million (8.14%) in fi scal year 2011-12. 6. Out of the total amount disbursed in fi scal year 2011-12, the share of grants is US$ 630.9 million (60%); the share of loans is US$ 254.7 million (25%) and technical assistance is equivalent to US$ 159.5 million (15.0%). 7. Of the total disbursements made in 2011-12, 77 percent went through on budget avenues and 23 percent through off budget avenues. vi 8.
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