7. Key Policies

To achieve the above mentioned objectives, the following policies will be adopted:-

7.1 Concessional loans: Foreign loan assistance will be used in a selective manner only after examining the objectives, objectives and benefits of the projects and programs. , through which economic and social objectives could be achieved by increasing the economic growth rate with less external debt burden. Nepal will develop deep partnerships with international donor organizations and jointly evaluate the effects of the contribution of loan aid received from those donor organizations on social and economic development. The measures to be taken in this regard will be as follows:-

(a) Foreign loans will be used for projects and infrastructure development that will get high returns.
(b) Each new loan shall be analyzed for its various effects before acceptance. Investment will be concentrated (d) Possibilities will be sought to avoid the negative impact on the debt obligations of the Government of Nepal due to fluctuations in the regulatory rate while receiving foreign loans.
(e) To reduce the debt burden of the government, any amount of loan assistance will be prohibited from being spent on studies and study tours.
(f) The expenses incurred in the services of consultants and foreign experts will be reduced from the amount of loan assistance.
(g) No credit will be taken from any merchant or supplier. But this will not stop the issue of taking mixed loans.
(h) Government of Nepal will not guarantee loans to government-owned institutions and other institutions.

7.2 Grant support:- Since grant support will not be a liability to future generations and will not create further obstacles to the government's existing limited financial framework, Nepal will not accept this type of support. Aid needs to be encouraged more. Therefore, the policy of emphasizing on receiving grant aid first and only in the case of non-receipt of subsidized loans will be adopted.As far as possible, it will be emphasized to make arrangements that help in taking subsidized loans. In a less developed country like Nepal, grant aid is more suitable than concessional loans for many projects and programs. Technical assistance taken for project design, institutional capacity, growth, technical support (Tbhazalshabidyabapkatyaushlan), monitoring and review of the project seems to be more useful than taking it under concessional loans. Emphasis will be placed on arranging co-financing for the project's initial expenses and technical support through grants. 7.3 Budget support:- Program support (compared to project support) is required for the short-term as well as the long-term. Such assistance will also be sought in the context of budgetary assistance under appropriate circumstances including sectoral or macroeconomic programs. 7.4 Technical assistance:- Technical assistance should be able to make a sustainable contribution to the development process of Nepal. Through the proper use of local manpower, the transfer of expertise and technology, and the appropriate and selective use of technical assistance, internal institutional capacity will be enhanced and dependence on technical assistance and foreign consultants will be reduced. Technical assistance will mainly be focused on issues such as assisting in the implementation of large projects, improving certain economic and social sectors, and guiding the strategic direction of the country, such as developing development activities of central and local level agencies, and enhancing the capacity for implementation and evaluation. A selective process will be adopted while accepting technical assistance in other areas as well. Borrowing for technical assistance will be discouraged. 7.5 There are mainly two types of technical assistance – non-project related technical assistance and technical assistance related to the project. And when resources are mobilized in the use of experts, the la of the countryIn addition to receiving financial support, the capacity of local organizations and experts is also enhanced. This process should be continued further. Therefore, donors will be encouraged to enhance their capacity by using local institutions and technical skills as much as possible in technical assistance not related to the specific project. A policy will be taken to encourage donors to do so. In addition to increasing the capacity of the local level, taking into account the local needs, conditions and capacity, appropriate types of technology that are sustainable for a long time will be selected and contribute to the improvement of the quality of projects and programs. This should be taken as a government effort by the donor side to make the development process qualitative and ensure more cost-effective and high-productivity sustainable investment through the use of appropriate technology and manpower.

7.7 Two other aspects of technical assistance should also be considered. . Nepal has received the services of a large number of volunteers and their contribution to the development of the country is commendable. But other efforts are needed to make the involvement of volunteers more suitable and quality. The government will identify specific areas where volunteer services are needed and where they can contribute more. Based on that, arrangements will be made to request the donors to appoint volunteers in such areas. Another aspect of technical assistance is technical assistance between developing countries. It is expected to encourage the increase and expansion of the Nepal government's assistance and such technical assistance will be provided through more and more regional organizations. Donors will be encouraged to utilize regional technical resources and provide technical assistance, especially from third countries in the region.

7.8 Revenue Mobilization – For a low-income country like Nepal, opportunities to mobilize more revenue are limited.are In this context, foreign aid can make a significant contribution by providing the necessary means to achieve development objectives. It can directly fill the lack of government revenue. In addition to this, it also helps in revenue growth indirectly in various ways. For example – (a) Technical assistance helps in enhancing the capacity of tax administration. (b) The use of foreign aid helps in further economic growth and increases the tax base. For this, a policy will be taken to choose projects that increase economic growth in the short term and medium term. This will be an important aspect of the policy to determine the choice of the project. (c) Foreign aid can be directly used in projects in the field of increasing the revenue of the government. Therefore, when using foreign aid, more emphasis will be placed on projects that help to improve internal revenue mobilization by increasing gross domestic product and employment and achieving high economic growth rates. They have not been able to provide the day and revenue. Lack of financial resources, poor management, delays in maintenance? Capital owned by the public sector has been underutilized due to many reasons such as inappropriate investment. In addition to normal annual operating expenses, significant equipment, supplies and other related current expenses can be incurred to increase the efficiency in the use of the country's capital reserves, even a small level of intervention in important points with foreign aid can get immediate benefits. Foreign aid will be taken to increase the efficiency of the existing accumulated capital and to use it appropriately. Promoting this type of program and objective aid can be an important aspect of foreign aid policy. 7.10 Building national capacity and building partnerships - Mobilizing foreign aid to strengthen national capacity by encouraging Nepalis to increase their leadership in project management. is necessary. to the planning units of the concerned MinistriesSpecial emphasis will be placed on strengthening. By establishing an effective communication network, the process of coordination between the concerned parties will be strengthened. The capacity of internal foreign aid management will be strengthened by increasing the partnership between the government, private sector, civil society (mainly local non-governmental organizations and community-based organizations) and donors. Building an effective partnership between stakeholders at every stage of project design and implementation will help to get the maximum benefit from the project, achieve its sustainability, control corruption and improve governance. In addition to this, the partnership between the government sector and the private sector also helps to increase the national capacity to manage the development of the private sector and ultimately development activities. The experience and skills they have in different places can be used in the development programs of Nepal government, especially in rural and remote areas. Such organizations bring different kinds of resources and expertise to Nepal from ordinary people of other countries, private sector and various institutions. They also use bilateral, multilateral and other official development resources. In addition, international non-governmental organizations have played an important role in spreading positive views about Nepal and Nepal's development in other countries. They also have various comparative advantages. However, due to the large number and variety of people working in Nepal, effective monitoring and observation of their activities is equally important. The government has the right to keep information about the funds received in Nepal through international non-governmental organizations, its sources and its use. This transparency is also important for the planning of sectoral activities and programs. Monitoring of foreign aid flowed by international non-governmental organizations andEvaluation and utilization of such aid will be made more transparent for the beneficiary people and the Government of Nepal. For this, the following measures will be adopted:-

(a) In terms of registration, renewal and facility utilization of international non-governmental organizations, administrative procedures will be simplified.
(b) The Social Welfare Council will be developed as an umbrella organization for the mobilization of international non-governmental organizations and registration of international non-governmental organizations and other administrative support will be provided from there.
(c) The capacity of the Social Welfare Council to coordinate and monitor the activities of international non-governmental organizations will be strengthened (d) Ensuring that all international non-governmental organizations are registered with the Council. Arrangements will be made to have a project agreement with the relevant agencies in accordance with the framework for registering international non-governmental organizations.
(e) Arrangements will be made for international non-governmental organizations to establish relations with local bodies and related parties in accordance with the Local Self-Government Act as far as possible.
(f) International Non-Governmental Organizations will be forced to comply with applicable tax laws and audit regulations.
(G) Maximum use of local manpower and resources will be ensured in international non-governmental organizations.
(h) Bilateral aid funds available in Nepal for programs run by non-governmental organizations will be ensured to be provided to those local non-governmental organizations and local community organizations.
(i) Efforts will be made to increase the participation of local non-governmental organizations in the open development aid competition process, and the partnership of international non-governmental organizations and local non-governmental organizations will be developed.
(j) They will be encouraged to carry out their own activities under the guise of cost sharing and each other's activities.
(k) Local authorities or local NGOs, rather than letting international NGOs run the program directlyEmphasis will be placed on conducting the program in partnership with .
(l) When international non-governmental organizations select local gasses as partners to conduct their programs, they should treat local gasses equally by adopting transparent and definite bases.
(d) International non-governmental organizations will be encouraged to conduct their programs in rural and remote areas.

7.12 Ensuring leadership and ownership of the Government of Nepal – Ensuring the ownership of the Government of Nepal and the beneficiary people in development programs to enhance the effectiveness of foreign aid. Arrangements will be made. In this context, the role of donors in the development process will be developed as a facilitator and helper. For this, the following measures will be adopted-

(a) Transferring the responsibility of formulating and implementing the plan to the national level.
(b) To be treated equally in terms of budgeting, ownership and implementation, including budgeting, ownership and implementation of projects operated entirely by the Government of Nepal with its own resources and in terms of accountability.
(c) To bring consistency in project implementation by discouraging project management through separate project implementation units or development committees.
(d) encouraging donors to contribute to the enhancement of national ownership, and
(e) Expand and strengthen the decentralized planning and implementation system. Sustainable development will be ensured by increasing the ownership of the development process and proper management and operation of the project. This will help to control corruption, increase capacity and strengthen the government system.

7.13 Private sector - In the past decade, there has been a significant change in the role of the private sector in the national economy. Currently, the private sector has played a leading role in increasing economic growth. Foreign aid has helped the public sector to a large extent. But in the construction and implementation of projects and programs operated by foreign aid, private QThe involvement of the sector should not be separated. In particular, the private sector can play a larger and expanded role in the selection of technology through consulting services and contracts in projects operated with capital assistance. Foreign aid will be used as an important tool for the development of the private sector in accordance with the format and spirit of economic liberalization. Foreign aid that is contrary to the sustainable development of the private sector and the promotion of internal and external investment will not be encouraged. The private sector will also be made to cooperate with selected capital aid projects by gathering foreign resources and to provide complementary investment in the activities related to infrastructure construction that are going to be operated through foreign aid. The private sector will be encouraged to be included in projects and programs from the beginning, so that complementary investment opportunities can be found. The emphasis of this policy will be on giving priority to the private sector for investment. Nepal government will take priority for investment only if there is no option for private sector investment. The government will determine the special and possible role of the private sector to intensively involve the private sector in activities related to foreign aid.

7.14 Role of civil society – Civil society organizations are important partners in the development process of Nepal. They interact and interrelate at various levels of foreign aid operations. In addition to bilateral and multilateral aid, the Government of Nepal is not unaware of the fact that aid money flowing transparently through civil society organizations is an important and significant resource. They act as intermediaries between the Nepali people, the government and donors on various aspects of foreign aid (for example, the environment). They are partners in various fields of foreign aid activities, especially in rural areas. A very large number of community organizations in Nepal are involved in various aspects of the foreign aid structure. They are a foreign aided project in NepalLocal level partnerships have been developed between tha programs. To increase social mobilization and civil society involvement, UN federal NGOs have established multi-faceted relationships with local NGOs and community organizations, although this still needs improvement. The government expects to expand the involvement of local non-governmental organizations in the processes from design to implementation of foreign aid projects. Their ideas will be encouraged by sharing information and enhancing transparency. They will be provided with the necessary support to express their views on development priorities, opportunities and the impact of foreign aid on their communities.

7.15 International Policy Environment – ​​Donor policies and practices in Nepal are to some extent adopted by multinational and international forums. , are affected with instructions and decisions. Although there have been many important improvements in the direction and quality of development talks, the thoughts and experiences of developing countries and especially least developed countries have not been able to have a strong impact on such forums. Very less developed countries like Nepal lack the capacity of developed donor countries and donor organizations under their leadership. However, Nepal will use the opportunity to make a significant and decisive contribution to the international debate based on the experience it has gained in relation to development cooperation. In order for Nepal's contribution to be effective and appropriate, the ideas presented by Nepal should be based on an objective analysis of the experiences of development successes and failures in the country. The foreign aid policy will continue to emphasize this issue from now on. Local experts and organizations will be empowered to take an active role in evaluating Nepal's experience and formulating their ideas. Such ideas can be made available as suggestions in the multinational debate.

7.16 Issues that require special support from the donor community – Strong and reliable support from donors to achieve the development objectives of the Government of Nepal.Will adopt the policy of receiving. The Government of Nepal is confident that the process of development cooperation can be further strengthened by enhancing mutual understanding. Through existing institutional relations, Nepal presents its feelings, achievements and problems to the donor side. In addition, it expects special understanding from the donor community on the following issues-

(a) Sensitivity- Due to Nepal's unique geographical situation and other characteristics, the development policy and strategy adopted by Nepal will be independent and of its own kind. Policies applied elsewhere may not be suitable for Nepal.
(b) Selective behavior – The Government of Nepal wants to pay attention to the fact that foreign aid should be selectively attracted and concentrated in areas that directly contribute to raising the standard of living of the people. He wants the donor parties to provide support based on their respective comparative advantage and specialization. This will help the government of Nepal to internalize the process of development.
(c) Removing the practice of testing or using - Nepal is in favor of removing the expensive practice of only using technology in other areas including government technology. However, small-scale investigative efforts by the government, donors and beneficiaries will not be prohibited.
(d) Maintaining financial discipline - In an effort to adopt a transparent reporting system, attention will be paid to implementing internationally recognized accounting system monitoring and auditing to maintain financial discipline. In addition, it should be ensured that the audit of projects conducted with foreign assistance is done by the Auditor General's department.
(e) Transparency of funds flowing through international and local non-governmental organizations - Donors should compulsorily give the information and report of the expenses incurred through international non-governmental organizations and non-governmental organizations to the Government of Nepal.
(f) Reflecting the financial resources in the annual budget – making all types of aid sources transparent andThe support of the donor community will be taken to ensure that the arrangements are reflected in the annual budget.

(G) Improving the working methods of the donor party - An important part of the overall strategy to make foreign aid effective is to improve the working system of the donor party. Negotiations will be conducted regarding uniformity, quality and adaptation of prevailing laws in the treaties and agreements with donors. 7.17 The policies mentioned above are important to achieve the objectives of the foreign aid policy and to solve the problems that hinder the effective use of foreign aid. Foreign aid policy is an important element of the overall policy plan of the Tenth Plan. Likewise, the implementation of these policies will be assisted by the formulation of appropriate strategies and policy mechanisms.