• Foreign assistance is given by developed countries and international development organizations to support the economic, sociological and political development of developing countries with ultimate goal of poverty reduction.
  • Can be in the form of loan or grant
  • Can be cash, material or technical help
  • 1st assistance to Nepal was given by US in 1951
  • 55% of development budget comes from foreign assistance
  • 4% of GDP covered by assistance
  • Mostly used in social sector


  • Essential for socio-economic development & infrastructure development
  • Skill development through technical assistance
  • Great return from projects run from foreign assistance as cost-benefit analysis is through
  • Essential elements for development as internal budget only covers 20 to 30% of total development budget
  • Helps in increasing productivity and product
  • Helps in poverty alleviation
  • Helps in increasing investment on priority sectors
  • Helps in attracting FDI and private sector investment


  • High assistance especially loans will weaken the economy

Using assistance

  • Ministry of finance as a facilitating body assistance.
  • Nepal development forum

Paris declaration 2005

  • Principles governing good utilization of assistance
  • Ownership
  • Alignment
  • Harmonization
  • Managing for result
  • Mutual accountability


  • National priorities should be set before receiving assistance
  • Follow existing policy, rules & regulation while using assistance
  • Transparency & accountability is lacking
  • Accounting aspect is weak (book keeping)
  • Detail survey and study is lacking also cost benefit analysis
  • Weak human and infrastructure resources while implementing
  • Assistance generally used without including in national budget
  • Parliamentary oversight mechanism is weak
  • Opaque mechanism when it comes to use, monitoring & implementation
  • Challenges like globalization, technology usage, competition etc.
  • Challenge of gaining maximum out of foreign assistance


  • Improve policy, law, institutional mechanism and process
  • Identify priority sector while taking assistance
  • Flexibility research, detail survey, cost benefit analysis should be done to achieve maximum output
  • Include all assistance in budget for transparency & accountability
  • Accounting & book-keeping is necessary for objective and fruitful spending of the assistance
  • Special emphasis to institutional & infrastructure development
  • Focus on human resources development
  • Maximum utilization of domestic manpower and skills
  • Timely change of policy & rules regarding foreign assistance
  • Evaluation & monitoring of existing usage of aid
  • Use Auditor General Office for regular audit for transparency
  • Capacity building for planning, accounting and monitoring unit of concerned ministry
  • Computerized accounting system should get priority
  • Arrangement to use assistance on the sector its indended  for
  • Poverty alleviation and sustainability should be the priority while spending assistance
  • Develop tradition of spending assistance in national interest sector and national priority sector