INTERVIEW: MAHAT ON AID

Ram Sharan Mahat was appointed Vice-Chairman of Nepal´s National Planning Commission, the highest policy-making body, after the Nepali Congress Government came to power in May 1991. He recently spoke to Himal.

Excerpts:

ON PRIORITIES OF FOREIGN AID:

They are changing. We are making efforts to cut down on foreign technical assistance programmes and make more use of Nepali professionals. We want to be particularly selective on the loan front. We would like to take loans to finance capital-investment sectors such as transport and power, which give immediate and far-reaching returns. It is a matter of concern that loans for social sectors such as building schools or paying for recurrent programmes such as salaries have risen considerably in the last few years. The use of loans in the social sectors must be minimised. Our own resources, local initiatives and community involvement should help finance the social sectors. Through better taxation and other policies, we are also looking for ways to moblise our domestic resources to finance the Government´s expenditures. Our national savings, too, need to be raised.

ON DONORS:

We are seeking to change the approach used in giving us aid, Often agencies do their own surveys and research, identifying the sectors in need of assistance, saying that they have to make up for Nepal´s lack of experts. With impressive feasibility studies prepared by the donors, and equally impressive budgets also made available, and no homework on Nepal´s side, the Finance Ministry, in the past, had little option but to accept the what was offered. Now, we are saying that we should do-the research ourselves. Projects should be regarded as part of His Majesty Government´s programmes and not of this or that aid agency´s. We are also questioning whether every sector considered by the donors as needy of aid, is really so. The plan is to go into donor-proposed budgets of development programmes, making changes wherever they conflict with our national priorities. The donors, by and large, are agreeing to this proposal.

ON NEPAL´S DEBT BURDEN:

It is an unfortunate legacy of the past. Repayments on bilateral loans have been going on for almost two decades, of course. However, our multilateral loans have added to the burden. Though we are still at the early stages of repaying principals, our repayment obligations are quite awful. The first few loans do not mature for at least another five or 10 years, but we will eventually have to pay up. The devaluation of the Nepali rupee also adds to the problem because it makes even "soft" loans not so soft. This is one reason we are now seriously considering the real needs for loans before accepting them.

ON THE NPC´S EVALUATION OF 316 PROJECTS:

They represent 50 per cent of total projects of the Government, and 80 per cent of total development projects. This is the first time that the Planning Commission is carrying out such a massive evaluation. The projects are being judged on the basis of their local sustainability, performance and environment-friendliness. We hope to give the green light top projects that are sound; yellow to those that need to show more commitment to work; and, red to those that are just bad.

ON THE NATIONAL PLANNING COMMISSION:

We are more assertive than before, and have strengthened the institution professionally. In the aid sector, we are defining the priorities so that Nepal´s needs do not become donor-driven. I am satisfied with the credibility that the NPC has been able to generate over the past few months, and am happy with the seriousness with which donors now consult us. The Government, too, has assured us of its total support for our initiatives.