Trend Analysis of Japanese Aid to Nepal

Abstract

This study entitles “TREND ANALYSIS OF JAPANESE AID TO NEPAL“has been carried inpartial fulfillment of degree of master’s in Arts in Economics. It is an explanatory and analyzing type of thesis. The study analyzes the trend of Japanese aid to Nepal. The study further analyzes sectoral allocation, priorities and achievements of Japanese aid to Nepal.The secondary data are used in the analysis. Data have been collected through annual reports of Economics survey, Embassy of Japan Nepal, and Japan international co-operation agency (JICA) etc. Data are presented in figure tables percentage, chart, trend line and diagram. This era is an era of globalization and open market. Desirable or undesirably foreign aid is not possible to be refused by developing countries. So main issues on foreign aid are sectoral allocation,priorities and achievements of foreign aid, Effective utilization of aid.Descriptive research methodology which is based on secondary data analysis is followed.Result is presented in the analytical and descriptive form. Nepal received total foreign aid during 1975 to 2012 is Rs646466.70 million, out of which Rs361919.70 million 55.98 percent is of grant and Rs 284547.00 million 44.02 percent consists of total loan aid. In the initial period, most of the aid was in the form of grant but later on the share of loan has been increasing. Similarly commitment and disbursement is total commitment is Rs 969962.50 out of which Rs 646466.70 only 66.64 percent received total commitment. The difference between commitment and disbursement is mainly due to poor absorptive as well as non-performance on the side of Nepalese counter part. Every donor wants to provide the assistance in own priority on installment basis and they also observe the first performance in implementing the projects in different sectors. If theydonot find good performance of utilizing the assistance they will not disburse the wholly committed aid. To use foreign aid utilization is the process of reducing gap between the commitment and disbursement. Mainly, disbursement depends on the absorptive and competitive power ofthe receiving country. Absorptive capacity depends on incentive, human resource,systematic and procedure of the aid giving and receiving. Foreign aid is used for to fulfill the gap between the total expenditure and total revenue gap. During the 1975 to 2012 total expenditure is Rs 2899204.05 million and total revenue is Rs 2112285.70 million this show that resource gap is Rs 786918.35 . Japan has provided Rs 98132.47 million during the review period study as aid which consistof Rs 51769.71 million 52.75 percent grant and Rs46362.76 million 47.25 percent loans.The sectoral allocation, in the beginning Japan give the priorities in agriculture 18.73%education 8.66%,, food aid 5.30%, alternative energy 7.59%, Irrigation.0.64, Civil aviation 7.40 and communications 7.40 but present Japan give priorities in road transportation 34.19%, Drinking Water 6.03%, External loan payment 4.40%, local development 2.45Planning and Statistics 3.63%, Women, Children and Social Welfare 2.29and Peace and Reconstruction 0.89% etc. Total foreign aid is Rs.646466.70 million out of this Japanese aid is Rs. 98132.47 million15.17 percent total aid. It shows that Japanese aid covered the top positions among the donor countries.