FUNGIBILITY OF AID

Addressing a public ceremony in early December, Nepali Prime Minister Girija Prasad Koirala complained about the severe conditions imposed by donor agencies that often had debilitating effects on project implementation. Within a week, the World Bank announced its intention to pull out of the much-awaited and much-talked-about Melamchi water supply project which had been promoted for nearly a decade as the only solution to Kathmandu Valleys acute water scarcity. When soon after, a break-away faction of communists withdrew from the government necessitating a political realignment, the significance of the consecutive events wasn't lost to the cynics.

Donors continue to finance a substantial share of government expenditure. In fiscal year 1986/87, donors contributed about 54 percent of the development expenditure, a proportion which had gone up to 61 percent in 1995/96. Consequently, aid agencies have always had a definitive say in the development planning of the country. (Of late, they have even started intervening in the day-to-day management of projects by stalling transfers, approving pre-qualification of contractors and bypassing government channels by making direct payments.) Yet, they never want to share the blame for the failure of development aid to bring about the intended changes.