Foreign assistance projects under scrutiny: Ministry of Finance to assess slow progress

KATHMANDU: The Ministry of Finance (MoF) is gearing up to conduct on-site inspections of projects funded through foreign assistance, citing the sluggish progress of several initiatives.

Recently, the ministry expressed dissatisfaction with the slow pace of work during discussions with project leaders, highlighting that projects supported by foreign aid are spending less than 50 percent of their allocated funds each year.

The MoF identifies the lethargic progress of these projects as a significant factor contributing to the government’s slow capital expenditure. Dhani Ram Sharma, the joint-secretary of the MoF, remarked on the substantial portion of total capital expenditure attributed to foreign support projects, noting their unsatisfactory performance.

Sharma announced that the MoF is in the process of devising mechanisms for field inspections of projects supported by donor agencies. A collaborative effort between the MoF and government line agencies will conduct on-site evaluations of projects currently under construction.

Numerous projects backed by donors provide various reasons for delays in completion. In the initial phase, the MoF aims to verify the actual status of major projects. According to government regulations, projects receiving foreign assistance should undergo a global tender process to select contractors. However, MoF officials report that foreign contractors often encounter challenges that hinder smooth operations.

Currently, projects such as the expansion of Tribhuvan International Airport and road segments like Nagdhunga-Mugling, Butwal-Narayangadh, and Mugling-Pokhara are progressing at a slow pace. For instance, the Butwal-Narayangadh road expansion has only achieved 40 percent completion, a year past its initial deadline, despite receiving a Rs 17 billion loan from the Asian Development Bank.

Foreign assistance constitutes approximately half of the budget allocated for development works in the current fiscal year. The government has set a target to secure external loans of Rs 212 billion and foreign grants of Rs 49.94 billion for this purpose.

While the government typically expends about 60 percent of the capital budget annually, spending under this category in the first five months of the current fiscal year has only reached around 12 percent.