The share of foreign debt assistance in Nepal's annual budget has been increasing year by year. After the change in 2046, foreign grants and loans have been increasing. Especially due to the policy of attracting private sector investment through economic liberalization, the debt had reached 165.21 billion rupees in the first seven months of 2053/054, from about 36.8 billion rupees before 2047. The increasing percentage of loans over grants by donor countries and the increase in the value of the US dollar had increased the debt burden on poor countries including Nepal.

Foreign debt has become indispensable for Nepal's development for three and a half decades. Therefore, in the 1950s, Nepal had to depend on foreign debt for almost 50 percent of its development budget. However, a report was made public that the loans provided by rich countries could not lead to the progress and development of poor countries.

‘The Reality of Foreign Aid’ and the issue was mentioned in two reports published on 2011 by Helvtas and Action Aid after conducting research on foreign aid in Nepal. The decreasing percentage of available loans and the poor utilization of the aid had added to the challenges faced by poor countries. Japan, which provided the largest bilateral aid, had cut its aid by 15 percent.

In the 1950s, aid to developing countries that were in dire need of foreign aid began to be cut, while aid to rich countries in Central and Eastern Europe was increased by 10 percent.

Countries like Nepal, however, had to take foreign loans for development. However, the size of the loans was increased and grants were reduced. Questions were also raised about the utilization of the loans taken. Up until 1975/76, 74.1 percent of the total foreign aid available to Nepal was in the form of grants. However, in 1995/96, the grant had fallen to 33.8%. According to a report by Helvetas and Action Aid, by the financial year 2053/54, such grants had fallen to 50%. However, the debt burden had reached 75.6%. After the Second World War, the aid provided to poor countries in the name of humanity had been reduced. Experts concluded that even though the number of loans received by Nepal was decreasing, the size of the loan received annually was increasing, but the achievement was not visible. Even those who were the Finance Ministers tried to take as much loan as possible. However, due to the lack of transparency and accountability, high-ranking powerful officials used the loan to suit their interests and the possibility of corruption was also widespread, as estimated by the report's researcher, Shriram Pandey of Newera.

Researcher Dr. Ramesh Jung Khadka had responded that the amount of foreign aid provided an opportunity for political mobilization and corruption. He argued that foreign loans have cut the roots of social development and poverty alleviation. Planning Commission member Dr. Kishore Kumar Gurugharana, while releasing the report, said, ‘The more foreign aid the finance ministers receive, the more successful they consider themselves.’ He said that the country’s economy has become dependent on foreign aid due to the government’s wrong policies.

The problem of not receiving the estimated aid

The problem of not receiving the estimated foreign aid was increasing during the budget preparation process. In the annual budget of FY 2013/14, only Rs. 2.55 billion was received out of the estimated amount of Rs. 5.55 billion.

This problem has arisen because the budget has been kept on the basis of estimates without any agreement with the donor country. There is a provision in the Finance Act to include the amount in the budget only after an agreement has been reached to receive the grant aid, after setting a plan for its use, conducting a feasibility study and calculating the return on it. But it was ignored.

Nepal used to receive a large amount of grants till 2020 BS. However, by gradually reducing the grants, in the 1950s, it used to receive 75 percent loans and 25 percent grants. At that time, there were voices that the loan expenditure was not transparent, while the government was not able to make its specific details public.

Three years had passed since the Public Accounts Committee of Parliament demanded details of foreign aid. But the Ministry of Finance had not provided such details until the fiscal year 2054/055. After that, the Accounts Committee formed a subcommittee to find out the theoretical facts of foreign aid.

Government officials had been complaining that a large part of the aid provided was returned to the country due to the obligation of donor agencies to hire their own advisors, select technologies from their own countries, select the projects themselves, and obtain technical assistance from donors.

Kantipur Daily published a news article on the situation of decreasing foreign grants and increasing debt in Nepal, including the context of the utilization and effectiveness of the received funds, titled 'Nepal's Total Debt 165.21 Billion' on 2054 Poush 12. Similarly, Kantipur published a news article on the subject of the fact that finance ministers prepare the budget by estimating the receipt of foreign loans but have not received them, titled 'Estimation of Foreign Grants in the Budget: Problems in Implementation' on 9.

According to the economic survey presented by Finance Minister Swarnim Wagle in Parliament on Wednesday, Nepal's public debt (internal and external) has reached 2878 billion. Finance Minister Wagle had informed that the government has disbursed 3 trillion public loans in the current year alone. Wagle, in a joint meeting of Parliament on Friday, estimated that 247.28 billion foreign loans will be mobilized in the total budget of 2124.34 billion presented for the upcoming fiscal year 2083/84.