Nepal, like many other countries in the developing world, is heavily reliant on foreign aid for its development as well as for other social, economic and political initiatives. A particular sphere that is intrinsically related with and influenced by the aid regime is the country’s policy process. Aid agencies and their functionaries have been pervasive in Nepal’s policy making, legislative reforms and program design and implementation for over six decades, and we have little appreciation in regard to how foreign aid influences national policies, laws and programs. This discussion paper, which was developed out of SIAS-ASD collaborative fellowship program, intends to fill this gap. To do this, we address two broad questions here: i) how or to what extent foreign aid regime mediates policy process in Nepal? And ii) what changes are induced by aidsupported programs in Nepal’s policies, legislation and programs? We examine Nepal’s two policy sectors—forestry and local governance—as they comprise two important sectors where foreign aid regime in Nepal has been pervasive. We derive our general observations based on these two case studies.
We suggest that while foreign aid has been instrumental in generating policy, legislative as well as programmatic change in Nepal, the overall outcome is that the changes are more aligned with the priorities of donors and their functionaries. Despite renewed commitments through Rome (2003) and Paris (2005) declaration for aid effectiveness and harmonization, aid administration in Nepal entails co-opted national ownership and fails to accommodate to changing needs of the people. More effort is therefore required to ascertain that the government of Nepal duly represents people’s needs in relation to the mobilization of resources and effectively negotiates with development partners to be able to effectively administer and utilize foreign aid.