KATHMANDU: The Public Accounts Committee (PAC) of the House of Representatives has directed the government to mobilize foreign aid received by Nepal through national systems and government funds as far as possible.
The Committee has also instructed the concerned authorities to bring expenditures incurred through foreign aid within the scope of regular audits.
A meeting held at Singha Durbar on Thursday on the “Audit of Foreign Aid Received by Nepal” issued a nine-point directive on the management, mobilization and utilization of foreign assistance.
According to Committee Chair Bharat Bahadur Khadka, the government has been instructed to make arrangements to accept and mobilize only foreign development assistance that is directly linked to approved programmes.
The Committee has asked donor agencies to provide the government with complete details of all foreign aid mobilized outside the national budget and government fund system. It has also called for clear policies and procedures to be formulated and implemented to integrate such assistance into the national system.
The Committee has directed the government to include and allocate foreign aid in the national budget only after receiving a firm commitment that the funds will be available.
Similarly, it has called for the timely reimbursement of expenditures made through foreign aid. The committee said necessary measures should be taken to minimize the additional burden on the government’s resources caused by delays or failures in reimbursement.
The Committee also directed the government to maintain an integrated record of foreign aid commitments, actual receipts, expenditures, utilization and reimbursements and to update the records regularly through the relevant information systems.
It also directed the government to establish a system requiring all foreign aid to be registered in the Development Finance Information Management System (DFIMS) and for projects funded through such assistance to be approved through the system.
The Committee stressed that public procurement, auditing and national treasury management systems should be made more transparent and effective and brought in line with international standards to strengthen public confidence in government systems.
It also directed the government to strengthen project management, monitoring and implementation capacity to ensure that foreign-funded projects are completed within the stipulated time and approved costs.
Likewise, the Committee recommended that the government adopt a policy requiring a cost-benefit analysis before engaging foreign consultants. Such consultants should be hired only when they are needed to facilitate the transfer of new technology, skills and knowledge or to carry out complex technical work that cannot be handled domestically.
The Committee instructed the Ministry of Finance to prepare a clear action plan in coordination with the concerned ministries, the Office of the Auditor General, provincial governments and local levels to implement the nine-point directive.
It also urged the Ministry of Finance to regularly provide updated details on the progress of implementing the committee’s decisions, as well as information on foreign aid mobilized outside the national budget system, commonly referred to as off-budget aid.
The Committee has further directed the Government of Nepal to undertake necessary policy and institutional reforms to ensure that foreign aid is mobilized in line with national priorities, the budget system, public financial management, transparency, auditing and results-oriented spending.
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